S-1

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As filed with the United States Securities and Exchange Commission on December 14, 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

ExactTarget, Inc.
(Exact name of registrant as specified in its charter)

20-1367351
(I.R.S. Employer
Identification Number) 7372
(Primary Standard Industrial
Classification Code Number) Delaware
(State or other jurisdiction of
incorporation or organization)

20 North Meridian Street
Indianapolis, Indiana 46204
(317) 423-3928
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Scott D. Dorsey
Chief Executive Officer
ExactTarget, Inc.
20 North Meridian Street
Indianapolis, Indiana 46204
(317) 423-3928
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
Joseph E. DeGroff, Esq. Janice Wilken, Esq. Ice Miller LLP One American Square Suite 3100 Indianapolis, Indiana 46282 (317) 236-2100	Traci M. Dolan Chief Financial Officer, Executive Vice President of Finance and Administration ExactTarget, Inc. 20 North Meridian Street Indianapolis, Indiana 46204 (317) 423-3928	William B. Asher, Jr., Esq. Lee S. Feldman, Esq. Choate, Hall & Stewart LLP Two International Place Boston, Massachusetts 02110 (617) 248-5000

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

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 box: o

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

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. o

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. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.001 per share	$86,250,000	$2,649

(1)

Includes shares the underwriters have the option to purchase to cover over-allotments, if any.

(2)

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

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 OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

The information in this prospectus is not complete and may be changed. We 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 we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 14, 2007

Shares
Common Stock

ExactTarget, Inc. is selling             shares of common stock and the selling stockholders identified in this prospectus are selling an additional              shares. We will not receive any proceeds from the sale of the shares sold by the selling stockholders. We and the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to             additional shares from us and the selling stockholders to cover over-allotments, if any.

This is an initial public offering of our common stock. We currently expect the initial public offering price to be between $                    and $                    per share. We have applied to list our common stock on The NASDAQ Global Market under the symbol "EXTG."

INVESTING IN OUR COMMON STOCK INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 9.

	Per Share	Total
Initial public offering price	$	$
Underwriting discounts	$	$
Proceeds before expenses, to us	$	$
Proceeds before expenses, to the selling stockholders	$	$

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

Thomas Weisel Partners LLC William Blair & Company

Wachovia Securities

Pacific Crest Securities

Canaccord Adams

The date of this prospectus is             , 2008.

TABLE OF CONTENTS

	Page
Prospectus Summary	1
Risk Factors	9
Forward-Looking Statements	29
Use of Proceeds	30
Dividend Policy	31
Capitalization	32
Dilution	33
Selected Consolidated Financial and Other Data	34
Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Business	53
Management	69
Principal and Selling Stockholders	87
Certain Relationships and Related Person Transactions	89
Description of Capital Stock	91
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders of Common Stock	95
Shares Eligible for Future Sale	99
Underwriting	102
Legal Matters	106
Experts	106
Where You Can Find More Information	106
Index to Financial Statements	F-1

    You should rely only on the information contained or incorporated in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. We and the selling stockholders are offering to sell shares of common stock and seeking offers to buy shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the common stock.

    In this prospectus "Company," "we," "us" and "our" refer to ExactTarget, Inc. Unless otherwise indicated, all information in this prospectus assumes no exercise of the underwriters' over-allotment option.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information concerning our company, the common stock being sold in this offering and our financial statements appearing in this prospectus. Because this is only a summary, you should read the rest of this prospectus before you invest in our common stock. Read this entire prospectus carefully, especially the risks described under "Risk Factors."

Our Business

    ExactTarget is a leading provider of on-demand email marketing software solutions to organizations of all sizes. Our clients depend on our solutions for business-critical marketing and event-triggered communications to increase sales, improve their return on marketing investments and strengthen customer relationships. Through our email offering and our recent expansion into emerging one-to-one marketing technologies, we help our clients deliver the right message to the right person at the right time through the right medium.

    Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our scalable and modular multi-tenant architecture enables us to serve enterprise as well as small and medium size organizations with a single instance of our software. Through our integration capabilities, our clients can easily incorporate ExactTarget functionality into critical business systems such as customer relationship management, or CRM, web analytics and marketing automation programs, and we have developed standardized integrations with Salesforce and Microsoft Dynamics™ CRM. Our software solutions are complemented by our optimization service offering, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.

    Our sales and marketing efforts are focused on adding new clients and expanding relationships with existing clients. Our field sales team, based in over 20 U.S. markets, sells directly into the enterprise business market via an in-person sales approach, while our inside sales force sells to small and medium size organizations primarily via telesales. Our sales teams are supported by marketing efforts focused on internet-based lead generation, email newsletters, development of partner relationships and sponsored industry events and conferences. Our indirect sales efforts are focused on building channel relationships with marketing service providers, value added resellers and embedded partners.

    We provide our solutions through annual subscriptions with additional usage-based pricing for email messaging above contracted levels. As of September 30, 2007, our direct client base consisted of more than 2,800 organizations of all sizes, which included approximately 400 marketing service providers. Through these marketing service providers, more than 2,000 additional organizations utilize our technology. Many of our clients are well known companies or organizations such as Careerbuilder.com, Expedia.com, Florida Power and Light, Gannett Co., Inc./USA TODAY, the Indianapolis Colts, The Leukemia & Lymphoma Society, Liberty Mutual Group, Papa John's and Wellpoint, Inc. We have achieved 27 consecutive quarters of organic revenue growth, and no single client represented more than 3% of our revenues in the nine months ended September 30, 2007. We achieved revenues of $19.7 million and $31.2 million for fiscal years 2005 and 2006, respectively. Our operating income increased from a loss of $1.4 million to income of $2.7 million during the same period.

Our Markets and Opportunities

    In today's media-saturated environment, gaining a customer's attention is increasingly difficult. Therefore, it is a competitive imperative for organizations to deliver personalized, relevant and

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timely marketing messages. This is achieved by leveraging customer relationship data to optimize every interaction with individual customers. Digital and interactive communication mediums such as email are growing rapidly because they allow for personalization on a mass scale, while reducing the time and cost required to reach customers. Additionally, email solutions allow marketers to test, track and optimize communications in real time.

    The demand for email marketing products and services is large and growing, driven by organizations' desires to leverage the efficiency and effectiveness of this marketing channel. According to Forrester Research, the size of the U.S. email market for technology and services related to integration, strategy, delivery, creative and analytics is expected to grow from $2.3 billion in 2007 to $3.5 billion in 2010, representing a compound annual growth rate of 15%. We believe these segments of the market will grow at a higher rate due to increased outsourcing to email providers as well as growth in event-triggered email communications. Additionally, we believe our total addressable market opportunity will be larger as organizations embrace emerging one-to-one marketing technologies such as short messaging service, or SMS, really simple syndication, or RSS, web landing pages and voice automated solutions.

Our Solutions

    Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our clients also utilize our software for sending and managing a wide range of event-triggered communications such as billing statements, transaction notifications and alerts. These business-critical communications require best-in-class functionality and services. We believe our solutions offer the following key benefits:

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Easy to deploy, cost effective and simple to use.  Our intuitive user interfaces and workflow have been designed to enable marketing professionals, with little or no technical background, to create highly targeted and customized one-to-one marketing communications. While easy to use and deploy, our solutions manage email marketing programs for the most sophisticated and demanding organizations.

•

Modular product offering meets diverse and evolving client needs.  We offer four editions of our on-demand software—Core, Advanced, Enterprise and Agency—allowing organizations to select the appropriate level of functionality for their needs. In addition, our on-demand architecture and modular product offering enable our clients to easily add functionality as they increase their email marketing use and sophistication.

•

Automate marketing processes.  Our solutions enable marketers to automate processes required to deliver highly relevant and timely communications. Through our interface, marketers can define, schedule, modify and save complex programs that deliver ongoing, automated event-triggered communications. Automating these processes enables marketers to focus on strategic marketing initiatives rather than the administration of ongoing or repeated customer communications.

•

Integration across internal and external applications.  Our open web services-based architecture enables our solutions to be easily integrated with a wide range of third party service providers and with our clients' in-house applications. Our standardized integrations with CRM software products such as Salesforce and Microsoft Dynamics™ CRM, as well as our partnerships with web analytics vendors such as Omniture, WebTrends and Coremetrics, enable our clients to better leverage customer data to deliver personalized and relevant communications.

•

Reliable and scalable technology infrastructure.  Our technology infrastructure supports large transactional volumes and allows our clients to store large amounts of data without limits while

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maintaining high application availability that is essential for their business-critical communications.

•

Embedded deliverability and functionality to assist with CAN-SPAM Act compliance.  We solve challenging issues associated with deliverability and help our clients with CAN-SPAM Act compliance through embedded functionality within our application, our internet service providers, or ISP, relationships, and our knowledge and experience regarding regulatory matters and deliverability standards.

•

Measurable results via reporting and analytics.  Marketing departments are under increased pressure to track spending, processes and approvals, as well as to justify marketing investment spend through return on investment, or ROI, and other analyses. Through our interface and integration with the leading CRM and web analytics providers, we offer robust reporting and analytics functionality.

Our Products and Services

    Our on-demand modular software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications and leverage emerging one-to-one technologies like SMS, automated voice solutions and web landing pages. We offer four editions of our application, which allow our clients to select the appropriate level of functionality for their individual needs. We also offer integrated and embedded products so that our clients can easily integrate our functionality into business-critical systems.

•

Core Edition—designed to help small and medium sized organizations. Comprehensive and easy-to-use functionality includes content management tools, subscriber management capabilities and real-time tracking.



•

Advanced Edition—tailored to meet the needs of the most sophisticated email marketers. In addition to Core Edition capabilities, functionality includes content syndication, dynamic content, relational data, automated interaction management, triggered and transactional communications, advanced reporting and integration capabilities.



•

Enterprise Edition—built for distributed organizations that seek centralized control and compliance management for their email marketing communications. In addition to Advanced Edition capabilities, functionality includes international sending, content locking and publishing, account provisioning, advanced role and permission administration, and enterprise tracking and reporting.



•

Agency Edition—enables marketing services providers to offer email marketing services to their customers. Through our interface, these service firms can provision, configure and manage their customer accounts through the Core, Advanced or Enterprise editions, as well as by private labeling our application to match their brand.



•

ExactTarget Integrated—integrates our products with leading CRM providers Salesforce.com and Microsoft Corporation. These standardized integrations are based on a single data model approach which eliminates the need for synchronization between applications, thus saving time and significantly reducing import, export and unsubscribe management errors. We also offer integrated products with leading web analytics providers including Omniture, WebTrends and Coremetrics. These standardized integrations automate the transfer of website visitor information into our application and return email link tracking information from our application to the web analytics platform.



•

ExactTarget Embedded—provides our messaging platform as a set of web services to independent software vendors and other software developers so that they may embed our

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functionality into their applications. This enables software providers to leverage our functionality, infrastructure and deliverability expertise, thereby significantly reducing their time to market and their upfront and ongoing cost of development and operations.

    Our software solutions are complemented by our optimization services offering, which includes technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.

Our Strategy

    Our mission is to be the leading provider of on-demand, one-to-one marketing software and services enabling organizations of all sizes to increase sales, optimize marketing investments and strengthen customer relationships. Key elements of our strategy include:

•

Maintaining focus on email marketing solutions;



•

Expanding direct and indirect sales;



•

Increasing revenue from current clients;



•

Extending product offering into emerging one-to-one marketing technologies;



•

Increasing our presence internationally; and



•

Selectively pursuing acquisitions.

Risks Associated with Our Business

    Our business is subject to numerous risks and uncertainties, as more fully described under "Risk Factors" beginning on page 9, which you should carefully consider prior to deciding whether to invest in our common stock. For example:

•

Changes in the market for email marketing solutions could harm our business;



•

We may not be able to compete effectively;



•

Any failure to protect client data would adversely affect us;



•

Defects in our products would harm our business; and



•

Our ability to attract and retain clients.

Corporate Information

    We began our operations in December 2000 as ExactTarget, LLC, an Indiana limited liability company, and merged into ExactTarget, Inc., a Delaware corporation, in July 2004. Our principal executive offices are located at 20 North Meridian Street, Indianapolis, Indiana 46204, and our telephone number is (317) 423-3928. Our website is http://www.exacttarget.com. The information contained in, or that can be accessed through, our website is not part of this prospectus.

    EXACTTARGET®, EXACTTARGET(&DESIGN)® and Deliverability REPORT CARD® are registered trademarks of ExactTarget, Inc. All other trademarks, tradenames and service marks appearing in this prospectus are the property of their respective owners.

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THE OFFERING

Shares of common stock offered by us	shares
Shares of common stock offered by the selling stockholders	shares
Over-allotment option	shares, provided by the company and the selling stockholders. See "Underwriting."
Common stock to be outstanding after this offering	shares, or             shares if the over-allotment option is exercised in full.
Use of proceeds	We intend to use our net proceeds for general corporate purposes, including working capital and possible acquisitions and investments. We will not receive any proceeds from the sale of common stock by the selling stockholders. See "Use of Proceeds."
Proposed NASDAQ Global Market symbol	"EXTG"

    The number of shares of common stock to be outstanding after this offering is based on the number of shares of common stock outstanding on                          , 2007, and excludes:

•

3,274,016 shares of common stock issuable upon exercise of options outstanding as of September 30, 2007 having a weighted average exercise price of $1.75 per share;



•

1,035,928 shares of common stock reserved as of September 30, 2007 for future issuance under our stock option plan; and



•

shares of common stock issuable upon conversion of unpaid dividends on our Series A and Series B preferred stock ($261,000 and $104,000, respectively) at the initial public offering price.

    Unless otherwise indicated, the share information in this prospectus is as of September 30, 2007 and has been adjusted to reflect or assume the following:

•

the conversion of all outstanding shares of our preferred stock, including the conversion of accrued but unpaid dividends on our Series C preferred stock, into an aggregate of 12,774,270 shares of our common stock immediately prior to the closing of this offering;



•

the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated by-laws immediately prior to the effectiveness of this offering; and



•

no exercise of the underwriters' over-allotment option.

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SUMMARY FINANCIAL DATA

    The following tables present our summary statements of operations data for the three years ended December 31, 2006 and for the nine months ended September 30, 2006 and September 30, 2007, and our summary historical, pro forma and pro forma as adjusted balance sheet data as of September 30, 2007. The summary statements of operations data for the three years ended December 31, 2006 are derived from our audited financial statements as of and for the three years ended December 31, 2006. The summary statements of operations data for the nine months ended September 30, 2006 and 2007 and the selected balance sheet data as of September 30, 2007 have been derived from our unaudited financial statements included elsewhere in this prospectus. Our unaudited financial statements have been prepared on the same basis as the audited financial statements and notes thereto, which include, in the opinion of our management, all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the information for the unaudited interim period. Our historical results for prior interim periods are not necessarily indicative of results to be expected for a full fiscal year or for any future period. You should read this data together with our financial statements and related notes included elsewhere in this prospectus and the information under "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

		Year Ended December 31,									Nine Months Ended September 30,
		2004			2005			2006			2006			2007
											(unaudited)
		(in thousands, except per share data)
Statements of Operations Data:
Revenues		$	11,585		$	19,734		$	31,175		$	22,008		$	34,164
Gross profit			9,227			15,102			23,347			16,437			25,943
Income (loss) before taxes			(1,382	)		(1,458	)		3,195			2,132			3,944
Income tax expense (benefit)			—			—			(3,285	)		—			1,655
Net income (loss)(1)			(1,382	)		(1,458	)		6,479			2,132			2,289
Accretion of redeemable preferred stock			(196	)		(420	)		(420	)		(315	)		(224	)
Net income (loss) available to common stockholders		$	(1,578	)	$	(1,878	)	$	6,059		$	1,817		$	2,065
Net income (loss) per common share:
	Basic	$	(0.20	)	$	(0.30	)	$	0.94		$	0.28		$	0.40
	Diluted	$	(0.20	)	$	(0.30	)	$	0.33		$	0.11		$	0.11
Weighted average number of common shares outstanding—basic			7,746			6,342			6,440			6,489			5,181
Weighted average number of common shares outstanding—diluted			7,746			6,342			19,502			19,457			20,005
Non-GAAP Financial Measure:
EBITDA(2)		$	(994	)	$	(510	)	$	4,670		$	2,989		$	5,750

⁽¹⁾

Net income (loss) includes stock-based compensation, as follows:

	Year Ended December 31,			Nine Months Ended September 30,
	2004	2005	2006	2006	2007
				(unaudited)
	(in thousands)
Stock-based compensation	—	—	113	71	200

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⁽²⁾

We provide "EBITDA," which is a non-GAAP financial measure, because we believe this measure provides important supplemental information regarding our operating performance and is often used by investors and analysts in their evaluation of companies such as ours. In addition, we use EBITDA as a measurement of our operating performance because it assists us in comparing our operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. We calculate EBITDA as net income (loss) before (1) other income, (expense) which includes interest income, interest expense and other income and expense (2) income tax expense (benefit), and (3) depreciation and amortization of property and equipment. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. EBITDA reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business.

    The table below reconciles net income (loss) to EBITDA for the periods presented:

	Year Ended December 31,									Nine Months Ended September 30,
	2004			2005			2006			2006		2007
										(unaudited)
Net income (loss)	$	(1,382	)	$	(1,458	)	$	6,479		$	2,132	$	2,289
Income tax expense (benefit)		—			—			(3,285	)		—		1,655
Other income (expense), net		(78	)		(24	)		453			480		126
Depreciation and amortization of property and equipment		310			924			1,929			1,337		1,932
EBITDA	$	(994	)	$	(510	)	$	4,670		$	2,989	$	5,750

    The following table summarizes our balance sheet data as of September 30, 2007:

•

On an actual basis;



•

On a pro forma basis to reflect the automatic conversion of all outstanding shares of our preferred stock into shares of common stock upon the closing of the offering; and



•

On a pro forma as adjusted basis to reflect the pro forma adjustment above, as well as the receipt by us of estimated net proceeds of $                          from the sale of                           shares of common stock offered by us, at an assumed initial public offering price of $                          per share, less estimated underwriting discounts and commissions and estimated offering expenses payable by us.

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	As of September 30, 2007
	(Unaudited)
	Actual			Pro forma		Pro forma as adjusted
	(in thousands)
Balance Sheet Data:
Cash and cash equivalents(1)	$	4,653		$	4,653
Total assets(1)		27,274			27,274
Total debt, including current portion		744			744
Total deferred revenue(2)		11,848			11,848
Redeemable convertible preferred stock		11,760			—
Total stockholders' equity (deficit)(1)		(1,682	)		10,078

⁽¹⁾

A $1.00 increase (decrease) in the assumed public offering price would increase (decrease) each of cash, total assets and total stockholders equity (deficit) by $             million, assuming the number of shares offered by us, as set forth on the cover of the prospectus, remains the same after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

⁽²⁾

Includes deferred revenue included in long-term obligations and other.

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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, together with the other information contained in this prospectus (including our financial statements and related notes), before making an investment decision. The risks described below are not the only ones we face. Additional risks we are not presently aware of or that we currently believe are immaterial may also impair our business operations. Our business could be harmed by any of these risks. 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 and Industry

Our business is dependent on the market for email marketing solutions and there may be changes in the market that may harm our business.

    We derive, and expect to continue to derive, substantially all of our revenue from our email marketing solutions. The market for email marketing solutions is at a relatively early stage of development, making our business and future prospects difficult to evaluate. Our current expectations with respect to areas of growth within the market may not prove to be correct.

    Should our clients lose confidence in the value or effectiveness of email marketing, the demand for our products and services will likely decline. A number of factors could affect our clients' assessment of the value or effectiveness of email marketing, including the following:

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continual growth in the number of emails sent or received on a daily or regular basis;



•

the ability of filters to effectively screen for unwanted emails;



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the ability of smart phones or similar communications to adequately display email;



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continued security concerns regarding Internet usage in general from viruses, worms or similar problems affecting Internet and email utilization; and



•

increased governmental regulation or restrictive policies adopted by ISPs that make it more difficult or costly to utilize email for marketing communications.

    Any decrease in the use of email by businesses would reduce demand for our email marketing products or services and our business and results of operation would suffer.

    In addition, it is uncertain whether our solutions will achieve and sustain the high level of market acceptance that is critical to the success of our business. Small to medium size organizations in particular have generally been slower than others to adopt email marketing as a part of their marketing efforts. Many companies have invested substantial personnel and financial resources in their marketing departments in order to develop internal solutions for managing their email marketing activities, and those departments may be reluctant or unwilling to purchase third party solutions such as ours. Other businesses may elect to manage their email marketing through software solutions obtained from their existing enterprise resource planning or infrastructure software providers. If the market for email marketing solutions fails to grow or grows more slowly than we currently anticipate, demand for our solutions may decline and our revenue would suffer.

    We may not be able to successfully address any of these challenges, risks and difficulties, including the other risks related to our business and industry described below. Failure to adequately do so could adversely affect our business, results of operations or financial condition.

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The market in which we participate is competitive and, if we do not compete effectively, our operating results could be harmed.

    The market for email marketing products and services is fragmented, competitive and rapidly evolving, and there are relatively low barriers to entry into this market.

    We provide email marketing products and services to a broad range of clients, including small, medium and enterprise organizations. We have a number of competitors that are focused on the enterprise market, including CheetahMail Inc. (a subsidiary of Experian Group Limited), e-Dialog, Inc., Epsilon Data Management, LLC (a subsidiary of Alliance Data Systems Corporation), Responsys, Inc. and Silverpop Systems Inc. Other companies are focused on providing email marketing products for small organizations, including Constant Contact, Inc., VerticalResponse, Inc. and Got Corporation. We also may face competition from marketing service providers as well as from in-house solutions that our clients may develop. Competition could result in reduced sales, reduced margins or the failure of our email marketing products and services to achieve or maintain more widespread market acceptance, any of which could harm our business. In the future, we may also face competition from new companies entering our market, which may include large, established companies, such as Microsoft Corporation, Google Inc. or Yahoo! Inc., each of which currently offers email applications, and CRM and web analytics and marketing automation providers. If these companies decide to develop, market or resell competitive email marketing products, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed.

    Our current and potential competitors may also have significantly more financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products. Our potential competitors may also have or develop more extensive client bases and broader client relationships than we have. In addition, these companies may have longer operating histories and greater name recognition than we have. These competitors may be better able to respond more quickly to new opportunities and to undertake more extensive marketing campaigns. If we are unable to compete with such companies, the demand for our products and services could decline.

Mergers or other strategic transactions involving our competitors could weaken our competitive position or reduce our revenue.

    We believe that our industry is highly fragmented and that there is likely to be consolidation, which could lead to increased price competition and other forms of competition. Increased competition may cause pricing pressure and loss of market share, either of which could have a material adverse effect on our business, financial condition and results of operations. Our competitors may establish or strengthen cooperative relationships with value added resellers, marketing service providers, third party consulting firms or other parties. Established companies may not only develop their own products but may also merge with or acquire our current competitors. It is also possible that new competitors or alliances among competitors may emerge and rapidly acquire significant market share. Any of these circumstances could materially and adversely affect our business.

We may be liable to our clients and may lose clients if we fail to protect the confidentiality and/or integrity of client information, provide poor service, experience unplanned outages, do not comply with our agreements or if there is a loss or corruption of client data.

    We will typically have access to and possession of certain client information, including confidential information such as email addresses, and other marketing and personally identifiable information concerning their employees, agents, partners, customers, prospects and other constituencies. As a part of our standard agreements, we undertake to use reasonable precautions to protect such

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confidential information. Our ability to collect, process and maintain the confidentiality of this information may be adversely affected by the intentional or unintentional acts of one or more of our employees, the malfunction of our software applications or other factors outside of our control. For example, computer viruses may harm our systems causing data we maintain and supply to our clients or data that our clients input and maintain on our systems to be lost or corrupted. In addition, third parties may obtain unauthorized access to our system and misappropriate this data.

    Our client agreements generally provide our clients the right to terminate their agreements for cause if we materially breach our obligations. Any failures in the products or services that we supply, including any such failure relating to problems with or loss of access to our systems, power outages or any other unplanned down time, or the loss or corruption of any of our clients' data, that we cannot rectify in a reasonable time period may give our clients the right to terminate their agreements with us and could subject us to liability. In addition to potential liability, if we supply inaccurate data or experience interruptions in our ability to supply or process data, our reputation could be harmed and we could lose clients.

    Although we maintain general liability insurance, including coverage for errors and omissions, this coverage may be inadequate, or may not be available in the future on reasonable terms, or at all. In addition, we cannot assure that these policies will cover any claim against us for loss of data or other indirect or consequential damages, and defending a lawsuit, regardless of its merit, could be costly and divert management's attention.

Defects or errors in our software could adversely impact our clients' ability to effectively use our application, affect our reputation, result in significant costs to us and impair our ability to sell our products or services, which would harm our business.

    Our software applications may contain defects or errors which could materially and adversely impact our clients' ability to use our application, affect our reputation, result in significant costs to us and impair our ability to sell our products or services in the future. After the release of new software products or new versions of existing software products, defects or errors may also be identified from time to time by our internal team and by our clients. The costs incurred in correcting any product defects or errors may be substantial and would adversely affect our operating results. Such defects or errors may occur in the future and could result in:

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loss of the business of the affected clients;



•

liability to the affected clients, including the substantial cost of defending lawsuits;



•

payment delays or reductions by the affected clients;



•

loss or delay of market acceptance of our products or services;



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additional costs to correct the errors or defects;



•

increased insurance costs; and



•

damage to our reputation.

Our failure to properly manage internet domains and IP addresses on behalf of clients could result in intermittent or prolonged email delivery failure and could harm our clients' reputation with internet service providers.

    We purchase and manage thousands of internet domains and internet protocol, or IP, addresses on behalf of our clients. Clients also delegate sub-domains of their primary internet domain to us. Our clients use these IP addresses and internet domains when sending email via our application software. ISP's use these IP addresses and domains to identify email senders. If we fail to manage these IP addresses and domains or to properly publish to internet directories the reference of these

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IP addresses and domains, it could confuse the identity of the client sending the email and/or cause intermittent or prolonged email delivery failure. Many clients use shared IP addresses and standard ExactTarget domains. If we fail to properly monitor the sending of email on these shared IP addresses and private domains, clients using such shared IP addresses and standard domains will experience intermittent or prolonged email delivery failure.

Our operating results will be adversely affected if we are not able to retain existing clients or add new clients.

    During the nine months ended September 30, 2007, approximately 80% of all our existing client contracts that were eligible for renewal were renewed. Such historic performance is not necessarily indicative of future performance, and there is no guarantee that new clients will demonstrate the loyalty our existing clients have exhibited in the past or that our existing clients will continue to use our products or services consistently. Clients cancel their accounts for many reasons, including perceptions that they do not use our products and services effectively, that our products or services do not generate the results our clients expected or that that they can manage their email programs without our help. We also have terminated clients that fail to comply with our standard terms and conditions, including failure to comply with our anti-spam policy. New clients must be added to replace clients whose accounts are cancelled or terminated, which may involve significantly higher sales and marketing expenditures than we currently anticipate. Although we utilize a broad range of direct and indirect channels to market and sell our products and services to new clients, if such efforts are not successful or the costs of such efforts increase, our ability to attract new clients will be adversely affected. Our continued success will also depend on our ability to effectively retain existing clients, and if we are unable to attract new clients in numbers sufficient to replace former clients or to otherwise grow our business, our operating results will be adversely affected.

We are in the process of converting to our new accounting system, and problems in the conversion or operation of the system or delays in preparing our quarterly or annual financial statements may result in our inability to accurately or timely prepare and file financial reports or otherwise comply with the financial reporting requirements of a public company.

    We have recently purchased and are in the process of migrating to a new accounting system, which we believe will provide us with the ability to expand our accounting capabilities as our business grows while providing the necessary accounting controls needed for compliance with SEC rules and the Sarbanes-Oxley Act. We will continue to run our existing accounting system through December 31, 2007. As of the date of this prospectus, we have not used the new accounting system to prepare financial reports for any periods, and our first financial statements utilizing our new accounting system will be for the year ending December 31, 2008. Any errors or delays we experience in using the new system could adversely affect our ability to file our quarterly, annual or other reports with the SEC on a timely and accurate basis.

We have experienced rapid growth in recent periods. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

    We have substantially expanded our business, client base, headcount and operations in recent periods. We have increased our number of employees from 124 at December 31, 2004 to 268 at September 30, 2007 and have increased our revenues from $11.6 million in 2004 to $31.2 million in the fiscal year ended December 31, 2006. Our historical growth rate is not necessarily indicative of the growth that we will achieve in the future. Our recent expansion has placed, and our anticipated growth may continue to place, a significant strain on our managerial, administrative, operational, technological, financial and other resources. Our success will depend in part on our ability to

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manage this growth effectively. We intend to further expand our overall business, client base, headcount and operations as we prepare to become a public company and to expand our operations internationally. Creating a global organization and managing a geographically dispersed workforce as well as a large and diverse client base will require substantial management effort and significant additional investment in our personnel, technology and infrastructure. In order to support and sustain our growth, we will be required to continue to improve our technology, our operational, financial and management controls and our reporting procedures. The additional headcount and capital investments we expect to add will increase our cost base, which will make it more difficult for us in the short term to offset any future revenue shortfalls by expense reductions. If we fail to successfully manage our growth, we will be unable to execute our business plan.

If we are not able to sell additional products and services to our existing clients, our revenue growth will be adversely affected.

    We sell our products and services to both new clients and existing clients. A significant factor in our success to date and in our business strategy is to expand our relationships with existing clients by selling additional products and services to these clients. Many of our existing clients initially purchase limited products or services and later upgrade to more robust and higher priced products or services or purchase additional products or services. In the future, these clients might not choose to upgrade or expand their purchases of our products or services. In addition, as we deploy new applications and features for our existing offerings or introduce new services, our current clients could choose not to purchase products or services based on these new offerings. If we fail to generate additional business from our existing clients, our revenue could grow at a slower rate or even decrease.

As our client base grows, we will be required to make significant investments in personnel to provide additional services to these clients, which could have a negative impact on our operating results.

    Our client base has grown to more than 2,800 direct clients and more than 2,000 indirect clients as of September 30, 2007. As our clients' usage of our on-demand email marketing software increases, we have experienced an increased demand for our optimization services, including: technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services. We presently employ approximately 80 service personnel and expect that the number of personnel required to provide these services to our clients will increase as our client base continues to grow. If we are unable to attract and retain qualified service personnel with the unique skill set required by the email marketing industry, our revenues and operating results would be adversely affected. In addition, as the services offerings of our email marketing solutions typically have a higher cost of revenue than our on-demand software solutions, the increase in sales of services may have an adverse effect on our gross profits and results of operations.

If we do not continue to innovate and provide solutions that are useful to existing and potential clients, we may not remain competitive, and our revenues and operating results could suffer.

    We have historically focused on establishing and maintaining the features of our products and services and ensuring their stability and ability to integrate with other software. However, our success depends on our ability to offer email marketing solutions to our clients that effectively compete with our competitors' products or other systems that may be developed by our clients. We expect our competitors to develop new products and services, and we will need to be innovative and invest significant resources in research and development to enhance our existing products and develop new products that keep pace with technological developments and meet our clients' needs

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in order to remain competitive. In addition, if we are unable to predict customer preferences or industry changes, or if we are unable to modify our products or service offerings on a timely basis, we may lose clients. Our operating results would also suffer if our innovations are not appropriately timed with market opportunities or are not effectively brought to market.

We have recently expanded our product functionality to include certain emerging one-to-one technologies that have yet to achieve market acceptance.

    We have recently expanded our marketing solutions beyond email to include emerging forms of digital one-to-one marketing, including SMS and web landing pages, and integration with permission-based voice communication solutions. The market for such emerging technologies is at an early stage, and it is uncertain whether our new digital one-to-one marketing capabilities will achieve and sustain high levels of market acceptance. If we are unable to continue to develop and successfully launch these new digital one-to-one marketing capabilities or if these new capabilities are not able to achieve market acceptance, our business, financial condition and results of operations may be adversely affected.

    These emerging forms of digital one-to-one marketing present new technological, regulatory and other challenges, with which compliance may be difficult and expensive. As emerging forms of digital one-to-one marketing continue to evolve, additional regulation by federal, state and foreign governments is likely. Compliance with the evolving regulation of these emerging channels, including regulations covering voice communications such as the Telephone Consumer Protection Act and the Telemarketing and Consumer Fraud and Abuse Prevention Act, may be expensive, and we may be unable to pass those increased costs on to our clients. Regulation may also restrict the frequency, timing and content of communications through these emerging channels, limiting their effectiveness and adversely affecting our business. It is also possible that government agencies may impose taxes on services provided through these channels, which may discourage the use of these emerging forms of digital one-to-one marketing. In addition, while we will try to build and maintain the technological infrastructure necessary for such emerging forms of one-to-one marketing, we may not be able to scale our infrastructure quickly enough to meet our clients' needs, or the implementation of such infrastructure may be so costly that it will adversely affect our financial performance. If we fail to successfully meet the new business challenges presented by these new digital one-to-one marketing solutions, we may not be able to attract new clients or retain existing clients in sufficient numbers to justify the costs of developing such applications, and our business and financial results may suffer as a result.

As the number of our clients, the volume of transactions supported by our applications and the amount of data that we store and utilize increase, we may not be able to scale our infrastructure quickly enough to meet our clients' growing needs.

    We are retaining and attracting new clients in growing numbers, and our clients are continually increasing the volume and sophistication of their transactions using our applications and the amount of data that we must store and process. Expanding the technological infrastructure required to satisfy the increasing number and needs of clients and the vast amounts of data that they require us to store and utilize will require additional expenditure and expertise. It is possible that we will not be able to scale our infrastructure as quickly as our clients' needs grow and, even if we can, the costs that we incur may be significant and may adversely affect our financial performance.

We may be unsuccessful selling both to small and medium size organizations and to large enterprises.

    Our strategy is to sell our email marketing solutions both to small and medium size organizations as well as to large enterprises. Our ability to attract and retain clients will depend in part upon our ability to provide them with email marketing solutions that meet the particular requirements of their

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organization. If the requirements of small and medium size organizations and those of large organizations diverge over time, we may be required to develop separate products, services offerings and sales and services organizations for those markets. This may result in increased expenses and, as a result, our results of operations may be adversely affected.

If we fail to promote and maintain our brand in a cost-effective manner, our business may be adversely affected by decreased revenues and/or increased operating expenses.

    We believe that developing and maintaining awareness of the ExactTarget brand in a cost effective manner is critical to achieving widespread acceptance of our existing and future products and services, retaining existing clients and attracting new clients. Recently, we launched a new corporate brand identity designed to better describe our product and service offerings and our understanding of the changing landscape for email marketing and one-to-one marketing technologies. Such brand promotion activities may not yield increased revenue and, even if they do, any revenue increases may not offset the expenses we incur to build our brand. If we fail to successfully promote and maintain our brand, we may not be able to attract new clients or retain existing clients in sufficient numbers to justify our brand promotion expenses and our business may suffer as a result.

Our business may suffer as a result of new governmental regulation of the conduct of business over the Internet.

    As Internet commerce continues to evolve, increasing regulation by federal, state or foreign governments becomes more likely. To comply with such laws or regulations, our operating expenses may increase, and we may be unable to pass along those increased costs to our clients. Any such new laws and regulations could also restrict our and our clients' ability to use email as a means of commercial marketing which would damage our business, and could also restrict the manner in which information can be communicated by businesses over the Internet including the frequency, timing and content of email communications. In addition, federal, state and foreign governmental or regulatory agencies may decide to impose taxes on services provided over the Internet or via email. Such taxes could discourage the use of the Internet and email as a means of commercial marketing which would damage our business.

Existing federal, state and international laws regulating email marketing practices impose certain obligations on the senders of commercial emails and could expose us to liability for violations, decrease the effectiveness of our email marketing solutions, and expose us to financial, criminal and other penalties for non-compliance, which could increase our operating costs.

    The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act establishes certain requirements on and specifies penalties for commercial email that violates the Act. The CAN-SPAM Act, among other things, obligates the sender of commercial emails to provide recipients with the ability to opt out of receiving future commercial email messages from the sender for at least 30 days after the initial email is sent, and to remove those electing to opt out within 10 business days of receipt of the opt out request. As a result, in the event our products and services were to become unavailable or malfunction for any period of time for any reason, our clients could violate the provision of the CAN-SPAM Act. Moreover, non-compliance with this and other aspects of the CAN-SPAM Act carries significant financial penalties. Many states have also passed laws regulating commercial email practices that typically provide a private right of action and specify damages and other penalties, which in some cases may be substantial. Some of these laws are significantly more punitive and difficult to comply with than the CAN-SPAM Act. Utah and Michigan, for example, have enacted do-not-email registries listing minors who are registered to avoid receipt of unsolicited commercial email that markets certain covered content, such as adult or other products the minor cannot legally obtain. It is not settled whether all or a portion of certain

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state laws may be preempted by the CAN-SPAM Act. In addition, certain foreign countries have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws. For example, some foreign laws prohibit sending unsolicited email unless the recipient has provided the sender advance consent to receipt of such email, or in other words has "opted-in" to receiving it. If we were found to be in violation of the CAN-SPAM Act, applicable state laws not preempted by the CAN-SPAM Act, or foreign laws regulating the distribution of email, whether as a result of violations by our clients or if we were deemed to be directly subject to and in violation of these requirements, we could be exposed to one or more of the following consequences:

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payment of statutory, actual or other damages;



•

criminal penalties;



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actions by state attorneys general;



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actions by private citizens or class actions; and



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penalties imposed by regulatory authorities of the U.S. government, state governments and foreign governments.

    Any of these potential areas of exposure would adversely affect our financial performance could preclude us from doing business in specific jurisdictions, and significantly harm our business. We also may be required to change one or more aspects of the way we operate our business, which could impair our ability to attract and retain clients or increase our operating costs.

Private spam blacklists have in the past interfered with, and may in the future interfere with, our ability to communicate with our clients and their ability to effectively deploy our email marketing products or services which could harm our business.

    We depend on email to market to and communicate with our clients, and our clients rely on email to communicate with their constituents. In an effort to regulate the use of email for commercial solicitation, various private companies maintain "blacklists" of companies and individuals, and the websites, ISPs and Internet protocol addresses associated with those entities or individuals, that do not adhere to standards of conduct or practices for commercial email solicitations that the blacklisting entity believes are appropriate. If a company's Internet protocol addresses are listed by a blacklisting entity, emails sent from those addresses may be blocked if they are sent to any Internet domain or Internet address that subscribes to the blacklisting entity's service or purchases its blacklist. It is possible that this sort of blacklisting or similar restrictive activity could interfere with our ability to market our products or services and communicate with our clients and could undermine the effectiveness of our clients' email marketing campaigns, all of which could damage our business.

    ISPs can also block emails from reaching their users. Recent releases of ISP software and the implementation of stringent new policies by ISPs make it more difficult to deliver our clients' emails. If ISPs materially limit, delay or halt the delivery of our clients' emails, or if we fail to deliver our clients' emails in a manner compatible with ISPs' email handling or authentication technologies, then the demand for our products or services could be reduced and our clients may seek to terminate their agreements with us.

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The ability of our clients to solicit, collect, process and use data derived from their customers may be restricted by existing and future privacy laws and regulations. In turn, we may be restricted from providing certain services, required to implement additional procedures and security systems and be exposed to the costs and liability associated with complying with or violating those regulations, all of which could harm our business.

    Existing laws regulate the solicitation, collection, processing, transfer, use and other exploitation of consumers' personal information and other types of information. Such laws and regulations may require companies to implement privacy and security policies, permit users to access, correct and delete personal information stored or maintained by such companies, inform individuals of security breaches that affect their personal information, and, in some cases, obtain individuals' consent to use personal information for certain purposes. Additional privacy laws and regulations are possible and they could, if enacted, prohibit the use of certain technologies that track individuals' activities on web pages or that record when individuals click through to an Internet address contained in an email message. Such laws and regulations could restrict our clients' ability to collect and use email addresses, page viewing data and personal information, which may reduce demand for our products and services. Some regulations may cause our clients to insist that we adopt or implement certain security and privacy policies and procedures, or to implement certain security measures. The cost to comply with such demands or regulations could be significant and would increase our operating expenses, and we may be unable to pass along those increased costs to our clients.

We may face liability and increased costs for unauthorized, inaccurate or fraudulent information distributed by our clients.

    Without our knowledge or direct participation, it is possible that our clients could use our email marketing products to transmit infringing content, libelous or negative messages, website links to harmful applications, inaccurate or fraudulent information, or to distribute copyrighted material or materials containing the intellectual property of a third party without that party's permission. We could face claims for damages and other relief for copyright, trademark, patent or other intellectual property rights infringement, misappropriation of trade secrets, defamation, libel, slander, negligence, fraud, or other torts relating to the content of email or use of our products.

    Even if claims asserted against us do not result in liability, we may incur substantial costs in investigating and defending such claims. If we are found liable for our clients' activities, we could be required to pay fines or penalties, redesign business methods or otherwise expend resources to remedy any damages caused by such actions and to avoid any future liability.

    Our existing insurance may not cover all potential claims to which we are exposed or may not be adequate to protect or shelter us for all liabilities that may be imposed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage would increase our costs and adversely affect our financial performance.

Many of our indirect sales channels are relatively new and, if we are unable to successfully develop and maintain relationships with indirect sales channel partners, our operating results would suffer.

    To complement our direct sales efforts, we have expanded our indirect sales channels by growing our relationships with various marketing service providers, value-added resellers and embedded partners. In addition to the ongoing success of our sales force, our ability to achieve significant revenue growth in the future will depend in large part on our success in establishing and maintaining certain of these relationships. Substantially all of our indirect sales to date have been through marketing service providers, and we have only recently expanded our indirect sales channels to include value-added resellers and embedded partners. Since many of these relationships are relatively new, our ability to develop and maintain these relationships remains uncertain. If we

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are unable to successfully develop and maintain those relationships or replace them with similar new relationships, our operating results would suffer.

Our relationships with original value-added resellers, embedded partners and marketing service providers may be terminated or may not continue to generate new email marketing clients, which could adversely affect our ability to increase our client base.

    We rely on value-added resellers, embedded partners and marketing service providers, as well as our direct sales force, to sell our products and services. These strategic partners sell our products and services, refer clients to us or incorporate our software into systems that they sell. More than 80% of our aggregate contract value for the nine months ended September 30, 2007 was derived from our direct client base with the balance principally attributable to marketing service providers who remarket our solutions to their customers. Although we have generally entered into agreements with these strategic partners, the agreements do not require them to use us as their sole email marketing product or service. As a result, we have no control over the amount of products or services that these strategic partners purchase from us or sell on our behalf, or the number of clients referred to us by them. In addition, if our strategic partners determine that our direct sales activities are competitive with their sales efforts, they may cease marketing our products and services actively or terminate their relationship with us. If we are unable to maintain our strategic relationships or establish similar new relationships, we may experience delays and increased costs in adding clients, which could have a material adverse effect on us. Any material decrease in the volume of sales generated by these strategic relationships could materially adversely affect our revenue and results of operations in future periods.

We have entered into a non-exclusive license that allows us to utilize methods covered by a business process patent held by a third party in providing our products and services, and our inability to maintain that license could have a material adverse effect on the attractiveness of our products or services, which would adversely affect our revenues and results of operations.

    We have entered into a license agreement with Hula Holdings, LLC and Subscribermail, LLC (to whom we collectively refer to as Subscribermail) under which we have a non-exclusive license to use methods covered by a business process patent held by Subscribermail for multi-level electronic mail communications programs. Assuming we make all required license payments, the license will survive for the term of the patent, which expires in November 2021. If we were to lose the license for any reason, the quality and competitive value of our products may decline, which would have a material adverse effect on our revenue, financial condition and results of operations. Because the license is non-exclusive, our competitors may have access to this methodology.

We currently use commercially available software and internet-based services to build our application, which may become cost prohibitive.

    Our application utilizes proprietary and commercially available software and internet-based services, including the products and services of Microsoft Corporation and Akamai Technologies, Inc. The cost of these commercially available products and services may increase in the future, which could materially increase the cost of providing our solutions to our clients and adversely affect our results of operations and financial position. We may be forced to seek commercially available alternatives, which may not be available upon terms and conditions acceptable to us, or at all. In addition, any alternatives might not allow us to provide the functionality of our current application, which could cause us to lose clients or fail to gain new clients.

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We are dependent on our executive officers and other key personnel, and the loss of any of them may prevent us from implementing our business plan in a timely manner if at all.

    Our success depends largely upon the continued services of our executive officers and other key personnel, particularly Scott D. Dorsey, our President and Chief Executive Officer, Traci M. Dolan, our Chief Financial Officer and Executive Vice President, Finance & Administration, Scott S. McCorkle, our Executive Vice President, Technology and Product, Scott J. Bleczinski, our Executive Vice President, Sales and Peter McCormick, our Vice President, Partnerships. The loss of one or more of our executive officers or other key employees and the process to replace any such key personnel could seriously harm our business and cause our stock price to decline.

We may not be able to attract and retain the highly skilled employees we need to support our planned growth.

    To execute our business strategy, we must attract and retain highly qualified personnel. Our business requires trained employees with a skill set unique to the email marketing industry. Competition for these personnel is intense, and we have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we do. Often we are required to recruit qualified candidates from outside the Indianapolis, Indiana, area, where our headquarters is located, which can be time-consuming and costly. In addition, in making employment decisions, particularly in the Internet and high-technology industries, job candidates often consider the value of the stock options or restricted stock they are to receive in connection with their employment. Significant volatility in the price of our stock after this offering may, therefore, adversely affect our ability to attract or retain key employees. In addition, we invest significant time and expense in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be severely damaged.

We are currently dependent upon a single data center to deliver our products and services, and any disruption could harm our business.

    We currently host our products and services and meet the needs of our clients from a single data center located in Indianapolis, Indiana, which is owned and operated by a third party. The owner and operator of this facility does not guarantee that our clients' access to our products or services will be uninterrupted, error-free or secure. We do not control the operation of this facility. This facility is vulnerable to damage or interruption from earthquakes, fires, terrorist attacks, power losses, telecommunications failures and similar events. It also could be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct. The occurrence of a natural disaster or an act of terrorism, a decision to close the facilities without adequate notice or other unanticipated problems could result in lengthy interruptions in the delivery of our products or services.

    Our agreement with our data facility provider has an initial term that expires in 2009, with automatic one year extensions thereafter subject to rights of termination. Our data facility provider has no obligation to renew its agreement with us on commercially reasonable terms, or at all. If we are unable to renew our agreement with the facility on commercially reasonable terms, we may experience costs or downtime in connection with the transfer to a new data center facility. Any errors, defects, disruptions or other performance problems with the delivery of our products or services could harm our reputation and may damage our clients' businesses. Interruptions in our products or services might also reduce our revenue, cause us to issue credits to clients, subject us to potential liability, cause clients to terminate their agreements or harm our renewal rates. In the event that our arrangement with the data center provider is terminated, or there is a lapse of service or damage to the facility, we could experience interruptions in the delivery of our products or service to our clients as well as delays and additional expense in arranging new facilities.

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    We are currently in the process of establishing a second data center, also owned and operated by a third party, to be located in Las Vegas, Nevada, that will offer redundant storage and operational capabilities to our facility in Indianapolis. The principal terms of our agreement for this new facility are comparable to those for our existing facility, and this second facility will also be subject to the same risks of interruption as our Indianapolis facility. This second data facility is intended to mitigate the risks to our business due to our present dependence upon a single data facility. However, if our second facility is unable, for technological or other reasons, to provide redundancy of data storage and operations, this failure may subject us to potential liability, cause clients to terminate their agreements with us or harm our renewal rates. Our Las Vegas facility is expected to be operational in the first quarter of 2008. We expect to make a significant investment in the establishment and operation of our second data facility, and our costs and expenses associated with these efforts may adversely affect our operating results.

If we are unable to protect our intellectual property rights and proprietary technology, it will be more difficult for us to compete for business and our financial results may suffer.

    Our intellectual property rights are important to us and our business. In order to successfully compete, we must protect our proprietary technology and our brand, marks and domain names. We rely on a combination of copyright, trademark, patent and trade secret laws, as well as licensing agreements, third-party nondisclosure agreements and other contractual provisions and technical measures, to protect our intellectual property rights. The protections afforded by these laws and measures, and our attempts to avail ourselves of them, may not be adequate to prevent our competitors from copying our solutions or otherwise infringing on our intellectual property rights or to prevent our clients or competitors from developing their own systems to perform the functions of our products or services. We do not rely heavily on patent protection to preclude or exclude others from exploiting functionality similar to that of our software. Existing copyright laws afford only limited protection for our intellectual property rights and may not protect such rights in the event competitors independently develop solutions similar or superior to ours. In addition, the laws of some countries in which our solutions are or may be used may not protect our product or service offerings and intellectual property rights to the same extent as do the laws of the United States.

    To protect our proprietary methods, we have filed a U.S. patent application which is currently pending, and we cannot assure you that the U.S. Patent and Trademark Office will allow this patent to issue, or that the issued patent claims will give us the protection that we seek. In addition, it is expensive and time consuming to seek patent protection, and we may not be able to obtain and maintain patents or prosecute patent applications at a reasonable cost or in a timely manner. As a result, we may not be able to obtain or maintain adequate patent protection.

    To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into non-disclosure agreements. These agreements may not provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. We have also registered trademarks in the United States and certain foreign countries. Enforcement of trademark rights against third parties can be expensive and is not always successful, especially in certain jurisdictions outside of the United States.

    We will not be able to enforce our intellectual property rights if we do not detect unauthorized use of our intellectual property. If we discover that a third party is infringing upon our intellectual property rights, we may need to undertake costly and time-consuming litigation to enforce our intellectual property rights. We cannot be sure we will prevail in any litigation filed to protect our

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intellectual property, and even if we are successful in protecting our intellectual property rights, we may incur significant legal costs, our brand recognition may be diminished and management's attention may be diverted from the ongoing development of our business, which could adversely affect our business. If we are unable to protect our intellectual property, our competitors could use our intellectual property to market products and services similar to ours, which could decrease demand for our products or services.

Intellectual property litigation and infringement claims, whether or not successful, may cause us to incur significant expense, could be time-consuming and may damage our business.

    It is not uncommon in software and Internet-related business to experience intellectual property claims and related litigation. Regardless of the merit of any particular claim that our technology or conduct violates the intellectual property rights of others, responding to and resolving such claims may require us to:

•

incur substantial expenses and expend significant management time and attention to investigate and defend such claims;



•

pay damages, potentially including treble damages, if we are found to have willfully infringed such parties' patents or copyrights;



•

cease making, licensing, selling, offering for sale, or using products or services that are alleged to incorporate the intellectual property of others;



•

indemnify our clients or others;



•

enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies; and



•

expend additional development resources to redesign our products or services.

    In addition, we may decide to initiate claims and litigation if we believe third parties are infringing on our intellectual property rights. This would also likely be expensive, time-consuming and subject to similar risks as just described.

    Any license required as a result of litigation or the threat of litigation under any patent may not be made available on commercially acceptable terms, if at all. In addition, some licenses may be nonexclusive, and therefore our competitors may have access to the same technology licensed to us. If we fail to obtain a required license or are unable to design around a patent, we may be unable to effectively develop or market our services, which could limit our ability to generate revenue or maintain profitability.

Our international sales and marketing efforts subject us to risks related to operations outside of the United States.

    Although less than 5% of our annual revenue was derived from clients outside the United States in 2006, we intend to expand our international sales and marketing activities. We do not have significant experience conducting international operations, and managing overseas growth could require significant resources and management attention and may subject us to new or increased levels of regulatory, economic, tax and political risks. Among the risks we believe are most likely to affect us with respect to our current and future international sales and operations are:

•

economic and political conditions and potential instability in various parts of the world;

21

•

laws and business processes that vary from company to company and may favor local competitors;



•

different and unexpected changes in regulatory requirements;



•

difficulties and expense of developing products and services in multiple languages;



•

less protection for intellectual property rights in some countries;



•

new and different sources of competition;



•

multiple, conflicting and changing tax laws and regulations that may affect both our international and domestic tax liabilities and result in increased complexity and costs;



•

our limited experience in doing business outside of the United States;



•

if we were to establish additional international offices, the difficulty of managing and staffing such international offices and the increased travel, infrastructure and legal compliance costs associated with multiple international locations;



•

difficulties in enforcing contracts and collecting accounts receivable, especially in developing countries;



•

if contracts are denominated in local currency, fluctuations in exchange rates;



•

tariffs and trade barriers, import/export controls and other regulatory or contractual limitations on our ability to sell or develop our products in certain foreign markets; and



•

higher costs associated with doing business internationally.

    If we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our international operations and reduce our international sales, adversely affecting our business, operating results and financial condition.

We may expand by acquiring or investing in other companies or by engaging in strategic relationships which could divert our management's attention and focus, disrupt our business, result in dilution to our stockholders' value and harm our business, operating results or financial condition.

    One of our business strategies is to selectively pursue the acquisition of or strategic relationships with companies that would provide access to new products, clients or markets. We have not made any acquisitions to date and, therefore, our ability as an organization to complete and integrate acquisitions is uncertain. Moreover, acquisitions and other strategic relationships involve numerous risks, including:

•

diversion of our management's attention and focus from their day-to-day responsibilities;



•

difficulties in integrating personnel and operations from the acquired business or acquired technology with our existing technology and solutions and in retaining and motivating key personnel from the acquired business;



•

diversion of capital and resources from other parts of our business;



•

difficulties in working with joint venture partners;

22

•

increases in our expenses that adversely impact our business, operating results and financial condition;



•

potential write-offs of acquired assets and increased amortization expense related to identifiable assets acquired; and



•

potentially dilutive issuances of equity securities or the incurrence of debt.

    If we do complete an acquisition or joint venture, our stockholders may be diluted and we may not ultimately strengthen our competitive position or achieve our goals, or such an acquisition or joint venture may be viewed negatively by our clients, stockholders or the financial markets.

If the economy worsens materially, our existing and potential clients may not purchase our products or services, or reduce their purchases of our products and services, which may harm our business.

    To the extent that the economy or market conditions materially deteriorate, our existing and potential clients may no longer consider investment in email marketing products and services a necessity, or may elect to defer purchases or reduce budgets in these areas. Either of these developments could have an adverse effect on our business, financial condition and results of operations.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States, including potential changes to our revenue recognition policies.

    Generally accepted accounting principles in the United States are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, the Securities and Exchange Commission, or the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported financial results, and could affect the reporting of transactions completed before the announcement of a change. For example, the American Institute of Certified Public Accountants and the SEC continue to issue interpretations and guidance for applying the relevant accounting standards to a wide range of sales contract terms and business arrangements. As a result, it is possible that our revenue recognition policies could be revised which could require us, for example, to change or modify the way we report our financial results, which could adversely affect our financial condition and operating results.

We have only recently achieved profitability and may not achieve sustained profitability in the future.

    We generated net losses of approximately $1.4 million in 2004 and $1.5 million in 2005 and generated net income of $6.5 million in 2006 and $2.3 million for the nine months ended September 30, 2007. We commenced operations in December 2000, and we have a limited operating history on which you can base your evaluation of our business, including our ability to increase our revenue or achieve and maintain profitability. We will need to generate and sustain increased revenue levels in future periods in order to sustain profitability, and, even if we do, we may not be able to maintain or increase our level of profitability. We intend to continue to expend significant funds to expand our direct sales force and develop and enhance our software and service solutions. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. If we are unable to sustain profitability, the market price of our common stock may fall.

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Our quarterly results of operations may fluctuate in the future. As a result, we may fail to meet or exceed the expectations of investors or securities analysts, which could cause our stock price to decline.

    Our quarterly revenue and results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control. If our quarterly revenue or results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Fluctuations in our results of operations may be due to a number of factors, including, but not limited to, those listed below and identified throughout this "Risk Factors" section in this prospectus:

•

our ability to retain and increase sales to existing clients and attract new clients;



•

changes in the volume and mix of services and products sold in a particular quarter;



•

the timing and success of new product or service introductions or upgrades by us or our competitors;



•

changes in our pricing policies or those of our competitors;



•

competition, including entry into the market by new competitors and new product and service offerings by existing competitors;



•

the amount and timing of expenditures related to expanding our operations, research and development, or introducing new services or products; and



•

changes in the payment terms for our services or products; and the purchasing and budgeting cycles of our clients.

    Due to the foregoing factors, and the other risks discussed in this prospectus, you should not rely on quarter-to-quarter comparisons of our results of operations as an indication of our future performance.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

    As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NASDAQ, have imposed various new requirements on pubic companies, including requiring changes in corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantial costs to maintain the same or similar coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

    In addition, the Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and disclosure controls and procedures quarterly. In particular, for the fiscal year ending on December 31, 2009, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as

24

required by Section 404 of the Sarbanes-Oxley Act. Our testing, or the subsequent testing by our independent registered public accounting firm that must be performed for the fiscal year ending on December 31, 2009, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses. Our compliance with Section 404 will require that we incur substantial accounting expense and expend significant management time on compliance related issues. We will evaluate the need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline. In addition, we could be subject to sanctions or investigations by NASDAQ, the SEC or other regulatory authorities, which would require additional financial and management resources.

Risks Related to this Offering and Ownership of our Common Stock

There has been no prior trading market for our common stock, and an active trading market may not develop or be sustained following this offering.

    Prior to this offering, there has been no public market for our common stock, and we cannot assure you that an active trading market will develop or be sustained after this offering. The initial public offering price will be negotiated between us and representatives of the underwriters and may not be indicative of the market price of our common stock after this offering.

The market price of our common stock may be volatile, which could cause the value of your investment to decline.

    Prior to this offering, our common stock has not been traded in a public market. We cannot predict the extent to which a trading market will develop or how liquid that market might become. The initial public offering price may not be indicative of prices that will prevail in the trading market. The trading price of our common stock following this offering is therefore likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control. These factors include:

•

quarterly variations in our results of operations or those of our competitors;



•

general economic conditions and slow or negative growth of related markets;



•

announcements by us or our competitors of new products or services or product or service enhancements, significant contracts, commercial relationships, strategic alliances, acquisitions or capital commitments;



•

our ability to develop and market new and enhanced products or services on a timely basis;



•

commencement of, or our involvement in, litigation;



•

disruption to our operations;



•

loss of key personnel or any major change in our board of directors or management;



•

future sales of our common stock by our executive officers, directors and significant stockholders;



•

changes in financial estimates including our ability to meet our future revenue and operating profit or loss projections;



•

changes in governmental regulations;



•

changes in earnings estimates or recommendations by securities analysts; and

25

•

other events or factors, including those resulting form war, terrorist incidents or responses to these events.

    In addition, the stock market in general, and the market for software and other technology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Such fluctuations may be even more pronounced in the trading market shortly following this offering. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. These trading price fluctuations may also make it more difficult for us to use our common stock as consideration to make acquisitions or to use employee stock options to attract and retain employees. In addition, in the past, following periods of volatility in the overall market and the market prices of companies' securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in substantial costs and a diversion of our management's attention and resources.

If securities or industry analysts do not publish research or reports about our business, or if they issue adverse information regarding our company or stock, our stock price and trading volume could decline.

    The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our stock may be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse opinion regarding our stock, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price to decline.

Purchasers in this offering will experience immediate and substantial dilution in the book value of their investments.

    The initial public offering price of our common stock is substantially higher than the pro forma net tangible book value per share of our common stock immediately after this offering. Therefore, if you purchase our common stock in this offering, you will incur an immediate dilution of $             in net tangible book value per share, based upon the initial public offering price of $             per share. The exercise of outstanding options will, and future equity issuances may, result in further dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution."

The price of our stock could decrease as a result of shares being sold in the market after this offering.

    Additional sales of our common stock in the public market after this offering, or the perception that these sales could occur, could cause the market price of our shares to decline. Upon the completion of this offering, we will have approximately                          shares of common stock outstanding. All of the shares sold in this offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended. Our directors, officers and other existing security holders will be subject to lock-up agreements described under the caption "Shares Eligible for Future Sale." Subject to the volume and other restrictions under Rules 144 and 701 under the Securities Act, these securities will be available for sale following the expiration of these lock-up agreements.

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Insiders will continue to have substantial control over us after this offering and will be able to influence corporate matters.

    Upon completion of this offering, our directors and executive officers and their affiliates will beneficially own, in the aggregate, approximately              % of our outstanding common stock. As a result, these stockholders will be able to exercise significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale of our company or its assets. This concentration of ownership could limit your ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us. For information regarding the ownership of our outstanding stock by our executive officers and directors and their affiliates, see "Principal and Selling Stockholders."

Our management will have broad discretion over the use of the proceeds from this offering and might not apply the proceeds of this offering in ways that increase the value of your investment.

    Our management will have broad discretion to use the net proceeds from this offering. Though at this time we have not designated the net proceeds for specific projects, we expect to use the net proceeds from this offering for general corporate purposes, including working capital. We may also use net proceeds for other purposes, including for possible investments in, or acquisitions of, companies, products or technologies, although we have no specific plans at this time to do so. Management may fail to use these funds effectively to yield a significant return, or any return, on any investment of these net proceeds.

We may need to raise additional capital, which may not be available, which would adversely affect our ability to operate our business.

    We expect that the net proceeds from this offering, together with our existing cash balances, will be sufficient to meet our working capital and capital expenditure needs for the foreseeable future. If we need to raise additional funds due to unforeseen circumstances or material expenditures, we cannot be certain that we will be able to obtain additional financing on favorable terms, if at all, and any additional financings could result in additional dilution to our existing stockholders. If we need additional capital and cannot raise it on acceptable terms, we may not be able to meet our business objectives, our stock price may decline, and you may lose some or all of your investment.

We do not expect to pay any cash dividends for the foreseeable future.

    We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future. Accordingly, 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 in the foreseeable future should not purchase our common stock.

Delaware law and our amended and restated certificate of incorporation and bylaws contain provisions that could delay or discourage takeover attempts that stockholders may consider favorable.

    Provisions in our amended and restated certificate of incorporation and bylaws, as they will be in effect upon the closing of this offering, may have the effect of delaying or preventing a change of control or changes in our management. These provisions include the following:

•

our board of directors is divided into three classes serving staggered three year terms;

27

•

the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or due to the resignation or departure of an existing board member;



•

the absence of cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;



•

the requirement for the advance notice of nominations for election to the board of directors or for proposing matters that can be acted upon at a stockholders meeting;



•

the ability of our board of directors to alter our bylaws without obtaining stockholder approval;



•

the ability of our board of directors to issue, without stockholder approval, up to 5,000,000 shares of preferred stock with terms set by the board of directors, certain rights of which could be senior to those of our common stock;



•

the elimination of the rights of stockholders to call a special meeting of stockholders and to take action by written consent in lieu of a meeting;



•

the required approval of a least 66²/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors and the inability of stockholders to take action by written consent in lieu of a meeting; and



•

the required approval of at least a majority of the shares entitled to vote at an election of directors to remove directors without cause.

    In addition, because we incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of a corporation's voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

•

before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;



•

upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or



•

at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

    These provisions may prohibit large stockholders, particularly those owning 15% or more of our outstanding voting stock, from merging or combining with us. These provisions in our amended and restated certificate of incorporation and bylaws and under Delaware law could discourage potential takeover attempts, could reduce the price that investors are willing to pay for shares of our common stock in the future and could potentially result in the market price being lower than they would without these provisions.

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FORWARD-LOOKING STATEMENTS

    This prospectus contains forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar words. These statements are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in "Risk Factors" and elsewhere in this prospectus. Accordingly, you should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. We have identified below some important factors that could cause our forward-looking statements to differ materially from actual results, performance or financial condition:

•

changes in the market for email marketing solutions could harm our business;



•

we may not be able to compete effectively;



•

any failure to protect client data would adversely affect us;



•

defects in our products would harm our business;



•

our ability to attract and retain clients; and



•

other factors discussed elsewhere in this prospectus.

    The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

    This prospectus also contains market data related to our business and industry. This market data includes projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates may have a material adverse effect on our business, financial condition and results of operations and the market price of our common stock.

29

USE OF PROCEEDS

    We estimate that the net proceeds from our sale of             shares of common stock in this offering will be approximately $             million, assuming a public offering price of $             per share, which is the mid-point of the range listed on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions. A $1.00 increase (decrease) in the assumed initial public offering price of $         would increase (decrease) the net proceeds to us from the offering by $         , assuming the number of shares offered by us, as set forth on the cover of this prospectus remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters' over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $             . We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders.

    The principal purposes of this offering are to obtain additional capital, to create a public market for our common stock for our existing and future stockholders, to assist us in our efforts to attract and retain key employees by making our equity compensation plans potentially more attractive, to facilitate our future access to the public equity markets, and to increase our presence in our markets.

    We intend to use the net proceeds from the offering to finance our working capital and for general corporate purposes. We may also use a portion of the net proceeds to acquire complementary products, technologies or businesses. We have no commitments or agreements to complete any such transactions.

    The amounts described above reflect our estimate of the use of our net proceeds from this offering, based on our current plans. The amounts and timing of our actual expenditures will depend upon numerous factors, including cash flows from operations and the anticipated growth of our business. Management will have significant flexibility in applying the net proceeds from this offering. See "Risk Factors—Risks Related to this Offering." Pending any use, the net proceeds of this offering will be invested in short-term, interest-bearing investment-grade securities.

30

DIVIDEND POLICY

    We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain all future earnings, if any, for the operation and expansion of our business and do not anticipate paying cash dividends or making any other distributions on our common stock in the foreseeable future. Payment of future dividends, if any, will be at the sole discretion of our board of directors and will depend on our results of operations, capital requirements, financial condition, prospects, restrictions contained in financing instruments and other factors that our board of directors may deem relevant.

31

CAPITALIZATION

    The following table sets forth our capitalization as of September 30, 2007:

•

on an actual basis;



•

on a pro forma basis to give effect to the automatic conversion of all of our outstanding preferred stock, including the conversion of accrued but unpaid dividends on our Series C preferred stock, upon the closing of this offering; and



•

on a pro forma as adjusted basis to give effect to the issuance and sale by us of             shares of common stock at an initial offering price of $             per share, the mid-point of the estimated price range shown on the cover page of this prospectus, after deducting the estimated underwriting discount and commissions and estimated offering expenses payable by us.

    The pro forma as adjusted information set forth in the table below is illustrative only and will adjust based on the actual initial public offering price and other terms of this offering determined at pricing.

    You should read the following table together with our financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this prospectus.

		As of September 30, 2007
		(Unaudited)
		Actual			Pro Forma			Pro Forma as Adjusted
		(in thousands, except share data)
Cash and cash equivalents		$	4,653		$	4,653		$
Total debt, including current portion			744			744
Redeemable preferred stock			11,760			—
Stockholders' equity:
	Common stock; $0.001 par value; 25,000,000 shares authorized and 5,107,789 shares issued and outstanding, actual; 100,000,000 shares authorized and 17,882,060 shares issued and outstanding, pro forma; 100,000,000 shares authorized and              shares issued and outstanding, pro forma as adjusted		5			18
	Preferred stock; at respective issuance date fair value; authorized 7,497,340 shares, issued and outstanding 6,204,438		9,116			—
Additional paid-in capital			—			20,863
Note receivable for purchase of common stock			(240	)		(240	)
Accumulated deficit			(10,563	)		(10,563	)
	Total stockholders' equity (deficit)		(1,682	)		10,078
Total capitalization		$	10,822		$	10,822		$

    The table above does not include:

•

3,274,016 shares of common stock issuable upon the exercise of stock options outstanding as of September 30, 2007 at a weighted average exercise price of $1.75 per share;



•

1,035,928 shares of common stock available for future issuance under our stock option plan as of September 30, 2007; and



•

on a pro forma basis, shares of common stock issuable upon conversion of unpaid dividends on our Series A and Series B preferred stock ($261,000 and $104,000, respectively) at the initial public offering price.

    A $1.00 increase (decrease) in the assumed initial public offering price of $             would increase (decrease) each of additional paid-in-capital, total stockholders' equity and total capitalization in the pro forma as adjusted column by $              million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same, after deducting the estimated underwriting discount and commissions and estimated offering expenses payable by us.

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DILUTION

    Our pro forma net tangible book value as of September 30, 2007 was $10.1 million, or $0.56 per share of common stock. Pro forma net tangible book value per share represents the amount of our total tangible assets less our total liabilities, divided by the total number of shares of common stock outstanding, as of September 30, 2007, after giving effect to the conversion of each outstanding share of our preferred stock upon the closing of this offering.

    After giving effect to this offering and the receipt of $              million of estimated net proceeds from this offering, based on an assumed initial public offering price of $             per share, the mid-point of the price range set forth on the front cover of this prospectus, the pro forma net tangible book value of our common stock as of September 30, 2007 would have been $              million, or $             per share. This amount represents an immediate increase in net tangible book value of $              per share to the existing stockholders and an immediate dilution in net tangible book value of $             per share to purchasers of our common stock in this offering. Dilution is determined by subtracting pro forma net tangible book value per share after this offering from the amount of cash paid by a new investor for a share of common stock. The new investors will have paid $             per share even though the per share value of our assets after subtracting our liabilities is only $             . In addition, the total consideration from new investors will be $              million, which is             % of the total of $              million paid for all shares of common stock outstanding, but new investors will own only              % of our outstanding shares of common stock. The following table illustrates such dilution:

Assumed initial public offering price per share				$
	Net tangible book value (deficit) per share as of September 30, 2007	$	0.56
	Increase per share attributable to pro forma conversion of preferred stock
	Pro forma net tangible book value per share before this offering
	Increase per share attributable to this offering	$
Pro forma net tangible book value per share after this offering
Dilution per share to new investors				$

    A $1.00 increase (decrease) in the assumed initial public offering price of $             would increase (decrease) the pro forma net tangible book value per share after this offering by $             per share and would increase (decrease) the dilution in pro forma net tangible book value to new investors by $             per share, 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 offering expenses payable by us.

    If the underwriters exercise their overallotment option in full, the pro forma net tangible book value per share after the offering would be $             million, or $              per share. This amount represents an immediate increase in net tangible book value of $             per share to the existing stockholders and an immediate dilution in net tangible book value of $             per share to purchasers of our common stock in this offering.

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SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

    The selected statements of operations data for each of the years ended December 31, 2004, 2005 and 2006 and the balance sheet data as of December 31, 2004, 2005 and 2006 have been derived from our audited financial statements, which have been audited by KPMG LLP, an independent registered public accounting firm, and are included elsewhere in this prospectus. The selected statements of operations data for the year ended December 31, 2003 and the balance sheet data as of December 31, 2003 have been derived from our audited financial statements, which have been audited by KPMG LLP, an independent registered public accounting firm, and are not included in this prospectus. The selected statements of operations data for the year ended December 31, 2002 and the balance sheet data as of December 31, 2002 have been derived from our unaudited financial statements. The selected statements of operations data for the nine months ended September 30, 2006 and 2007 and the balance sheet data as of September 30, 2007 have been derived from our unaudited financial statements and related notes, which are included in this prospectus. These unaudited financial statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments) that management considers necessary for the fair presentation of the financial information set forth in those statements in accordance with United States generally accepted accounting principles. The selected financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus. The historical results are not necessarily indicative of the results to be expected in any future period and the results for the nine months ended September 30, 2007 should not be considered indicative of results expected for the full year.

		Year Ended December 31,															Nine Months Ended September 30,
		2002			2003			2004			2005			2006			2006			2007
		(unaudited)															(unaudited)
		(in thousands, except per share data)
Statements of Operations Data:
Revenues		$	1,594		$	5,396		$	11,585		$	19,734		$	31,175		$	22,008		$	34,164
Cost of revenues			19			477			2,358			4,632			7,828			5,571			8,221
Gross profit			1,575			4,919			9,227			15,102			23,347			16,437			25,943
Operating expenses
	Sales & marketing		1,605			3,823			7,063			10,518			13,150			9,436			13,776
	Development		604			899			2,539			3,924			5,041			3,588			5,908
	General & administrative		721			1,164			929			2,094			2,415			1,761			2,441
Total operating expenses			2,930			5,886			10,531			16,536			20,606			14,785			22,125
Operating income (loss)			(1,355	)		(967	)		(1,304	)		(1,434	)		2,741			1,652			3,818
Other income (expense), net			4			(33	)		(78	)		(24	)		453			480			126
Income (loss) before taxes			(1,351	)		(1,000	)		(1,382	)		(1,458	)		3,194			2,132			3,944
Income tax expense (benefit)			—			—			—			—			(3,285	)		—			1,655
Net income (loss)			(1,351	)		(1,000	)		(1,382	)		(1,458	)		6,479			2,132			2,289
Accretion of redeemable preferred stock			—			—			(196	)		(420	)		(420	)		(315	)		(224	)
Net income (loss) available to common stockholders		$	(1,351	)	$	(1,000	)	$	(1,578	)	$	(1,878	)	$	6,059		$	1,817		$	2,065
Net income (loss) per common share—basic		$	(0.15	)	$	(0.11	)	$	(0.20	)	$	(0.30	)	$	0.94		$	0.28		$	0.40
Net income (loss) per common share—diluted		$	(0.15	)	$	(0.11	)	$	(0.20	)	$	(0.30	)	$	0.33		$	0.11		$	0.11
Weighted average number of common shares outstanding—basic			9,128			9,145			7,746			6,342			6,440			6,489			5,181
Weighted average number of common shares outstanding—diluted			9,128			9,145			7,746			6,342			19,502			19,457			20,005

34

	As of December 31,															As of September 30,
	2002			2003			2004			2005			2006			2007
	(unaudited)			(in thousands)												(unaudited)
Balance Sheet Data:
Cash and cash equivalents	$	527		$	745		$	2,445		$	3,842		$	4,940		$	4,653
Total assets		1,323			3,234			8,505			13,132			22,097			27,274
Total deferred revenue(1)		1,186			2,665			4,484			7,300			10,278			11,848
Total debt		—			27			300			1,910			1,248			744
Redeemable convertible preferred stock		—			—			10,696			11,116			11,536			11,760
Total stockholders' equity (deficit)		(16	)		(815	)		(9,043	)		(10,911	)		(4,383	)		(1,682	)

⁽¹⁾

Includes deferred revenue included in long-term obligations and other.

35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion contains forward looking statements that involve risks, uncertainties and assumptions that could cause our actual results to differ materially from our expectations. Factors that could cause such differences include those described in "Risk Factors" and elsewhere in this prospectus. Unless otherwise indicated, all references to 2004, 2005 and 2006 shall mean our fiscal year ended December 31, 2004, 2005 or 2006, as applicable.

Overview

    ExactTarget is a leading provider of on-demand email marketing software solutions to organizations of all sizes. Our clients depend on our solutions for business-critical marketing and event-triggered communications to increase sales, improve their return on marketing investments and strengthen customer relationships. Through our email offering and our recent expansion into emerging one-to-one marketing technologies, we help our clients deliver the right message to the right person at the right time through the right medium.

    Our scalable and modular multi-tenant architecture enables us to serve enterprise as well as small and medium size organizations with a single instance of our software. Through our integration capabilities, our clients can integrate our functionality into critical business systems such as CRM, web analytics and marketing automation programs, and we have developed standardized integrations with Salesforce and Microsoft Dynamics™ CRM. Our software solutions are complemented by our optimization service offerings, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.

    Our software editions—Core, Advanced, Enterprise and Agency—allow our clients to select the appropriate level of functionality for their needs. We provide our solutions to our clients primarily through annual subscriptions which include on-demand software access, contracted message volume and optimization services. Clients are charged additional usage-based fees for messaging above the contracted level.

    As of September 30, 2007, our direct client base consisted of approximately 2,800 organizations of all sizes. Our annual subscription pricing ranges from $1,500 to more than $1,000,000, depending on software edition, messaging volume, number of users or accounts and optimization services purchased. However, within this range the majority of our revenue is derived from client contracts having a value ranging from $10,000 to $150,000. During the nine months ended September 30, 2007, approximately 80% of all our existing client contracts that were eligible for renewal were renewed. We typically experience a higher renewal rate with our clients that have been under contract beyond their first year. The client renewal rate includes subscriptions that we terminate and clients that file for bankruptcy or are no longer in business at the date of renewal. The following table sets forth our revenues and EBITDA for the periods indicated, total deferred revenue at the

36

end of each such period, and the approximate number of our direct clients added during each period.

(in thousands, except client data)

	Year Ended December 31,					Nine Months Ended September 30,
	2005			2006		2006		2007
Revenues	$	19,734		$	31,175	$	22,008	$	34,164
EBITDA(1)		(510	)		4,670		2,989		5,750
Total deferred revenue(2)		7,300			10,278		9,084		11,848
Direct clients added		790			920		670		780

⁽¹⁾

We provide "EBITDA," which is a non-GAAP financial measure, because we believe this measure provides important supplemental information regarding our operating performance and is often used by investors and analysts in their evaluation of companies such as ours. In addition, we use EBITDA as a measurement of our operating performance because it assists us in comparing our operating performance on a consistent basis by removing the impact of certain non-cash and non-operating items. We calculate EBITDA as net income (loss) before (1) other income, (expense) which includes interest income, interest expense and other income and expense (2) income tax expense (benefit), and (3) depreciation and amortization of property and equipment. This non-GAAP financial measure is used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures. EBITDA reflects an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business.

⁽²⁾

Includes deferred revenue included in long-term obligations and other.

    We were organized as ExactTarget, LLC, an Indiana limited liability company, in December 2000 and merged into ExactTarget, Inc. a Delaware corporation, in July 2004. From our inception in 2000, we have raised an aggregate of approximately $20.0 million in cash through the sale of common stock and four classes of preferred stock—Series A, B, C and D shares—of which approximately $14.0 million has been used to fund the repurchase of some of our common stock and Series A and B preferred stock, leaving a balance of approximately $6.0 million invested in the business.

    We have achieved 27 consecutive quarters of organic revenue growth since December 2000. During 2004, our net cash used in operations was $0.5 million; we generated cash flows from operations of $1.2 million, $5.4 million, and $5.0 million for 2005 and 2006 and the nine months ended September 30, 2007. During these same periods, we incurred operating losses of $1.3 million for 2004 and $1.4 million for 2005, and operating income of $2.7 million for 2006 and $3.8 million for the nine months ended September 30, 2007.

Sources of Revenues

    We derive our revenues from annual subscriptions with multiple elements including on-demand software access, contracted message volume and optimization services. Clients are charged additional usage-based fees for messaging above the contracted level. Subscription agreements are typically one year in duration. Arrangements with clients do not provide the client with the right to take possession of the software supporting the on-demand application service at any time. More than 80% of our aggregate contract value for the nine months ended September 30, 2007 was derived from our direct client base with the balance principally attributable to marketing service providers who remarket our solutions to their customers. Revenues attributable to marketing service

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providers are also generated under annual subscription agreements for on-demand software access, contracted messaging volume and optimization services, but incremental messaging fees typically comprise a larger proportion of revenues from these clients than from our direct clients.

    Revenues for both direct and indirect clients are recognized ratably over the contract period commencing upon the later of the agreement start date or when all revenue recognition criteria have been met. Total revenues are driven primarily by the number of clients and the contracted value of the subscription agreements, including the on-demand software edition, contracted message volume and optimization services. Revenues attributable to messaging above the contracted level are recognized in the period in which the messages are sent.

    Our revenues are not concentrated within any one client or small group of clients. For the nine months ended September 30, 2007, no single client represented more than 3% of our revenues and our largest 10 clients accounted for less than 8% of our revenues. Clients are typically invoiced in advance for subscriptions on a periodic or annual basis with payment due upon receipt of invoice. Billings are reflected on the balance sheet as accounts receivable when invoiced or as cash when collected and as deferred revenues until earned and recognized as revenues ratably over the contract period. Accordingly, deferred revenue represents agreements entered into in the current and prior periods to the extent billed but unearned, and does not reflect that portion of subscriptions to be invoiced to clients on a periodic basis for which payment is not yet due. As the number of our large enterprise clients has increased, more of our clients have requested periodic instead of annual billing terms. As a result, we believe that the amount and proportion of aggregate contract value not reflected on the balance sheet through deferred revenue may continue to increase if this trend continues.

Cost of Revenues and Operating Expenses

    We allocate certain overhead expenses, such as rent, utilities, office supplies and depreciation of general office assets to cost of revenues and operating expense categories based on headcount. As a result, an overhead expense allocation is reflected in cost of revenues and each operating expense category.

    Cost of Revenues.    Cost of revenues consists primarily of wages and benefits for software operations and optimization services, as well as depreciation, licensing, maintenance and support for hardware and software used in production, and co-location facilities, bandwidth and infrastructure expenses. The expenses related to co-location, bandwidth and infrastructure are affected by the number of clients using our application, the complexity and frequency of their use, the volume of messages sent and the amount of stored data. In addition, these expenses are impacted by our requirement to maintain high application availability and redundancy. We expect these expenses to increase in absolute dollars as we continue to expand our business and serve the needs of larger and more sophisticated enterprise clients.

    Sales and Marketing.    Sales and marketing expenses consist primarily of wages and benefits for sales and marketing personnel, sales commissions, travel and entertainment expenses, and lead generation marketing programs. All sales and marketing costs are expensed as incurred, including sales incentives and commissions. Sales incentives are expensed in the period of contract signing and commissions are expensed upon receipt of payment. Our sales and marketing expenditures have historically been highest in the last two quarters of each year, which are periods of increased sales and marketing activity. In order to continue to grow our business and increase our brand awareness, we expect to continue investing substantial resources in our sales and marketing efforts. As a result, we expect that sales and marketing expenses will increase in absolute dollars as we invest to acquire new clients, but decrease as a percentage of revenues as our existing client base represents an increasing portion of our total revenues.

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    Development.    Development expenses consist primarily of wages and benefits for product strategy, product architecture, product design and development and quality assurance personnel. We focus our development efforts on usability, application performance, new features and functionality, and development of emerging one-to-one marketing technologies. We expense development costs as incurred. Direct development costs specific to new functionality is minimal due to the relatively short development cycle. Such costs are instead recognized as a component of development costs when incurred. We expect that development expenses will increase in absolute dollars as we continue to enhance our product offerings, but decrease as a percentage of revenues as we continue to scale our business.

    General and Administrative.    General and administrative expenses consist primarily of wages and benefits for executive, finance and accounting, legal, human resources, internal information technology support, and administrative personnel. In addition, general and administrative expenses include professional fees, bad debt expenses and other corporate expenses. We expect that general and administrative expenses will increase as we continue to add personnel to support our growth. We also anticipate that we will incur additional costs for personnel, professional services including auditing and legal services, insurance, and other corporate governance related costs specific to operations as a public company. We expect that our general and administrative expenses, in total, will increase in absolute dollars as we grow and operate as a public company. We expect that the costs as a percentage of revenues will increase in the next twelve months.

Accretion of Redeemable Preferred Stock

    Accretion of mandatorily redeemable preferred stock represents the dividends earned for the period by Series C preferred stockholders at a rate of $0.0716 per share which is payable in shares of common stock at $1.79 per common share. Series C preferred stock is classified on the balance sheet as temporary equity and is re-measured at each reporting period at the redemption value on that date. Series C dividends are accrued whether or not declared by the board of directors. Net income used in the calculation of basic earnings per share excludes the accretion of redeemable preferred stock. Net income used in the calculation of diluted earnings per share includes the accretion of redeemable preferred stock. Dividends for the Series C preferred stock accrued from July 15, 2004 to July 14, 2007.

Critical Accounting Policies

    Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

    We believe that of our significant accounting policies, which are described in the notes to our financial statements, the following accounting policies involve a greater degree of judgment, complexity and have a greater potential impact on our financial statements. A critical accounting policy is one that is both material to the presentation of our financial statements and requires us to make difficult, subjective or complex judgments for uncertain matters that could have a material effect on our financial condition and results of operations. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

    Revenue Recognition.    In accordance with Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition," we recognize revenues from subscriptions to our on-demand software ratably over the term of the subscription agreement commencing upon the later of the agreement start date or when there is persuasive evidence of an arrangement, the

39

service has been provided to the client, the collection of the fee is probable and the amount of the fees to be paid by the client is fixed or determinable. Amounts that have been invoiced are recorded in accounts receivable and deferred revenue until revenue recognition criteria have been met. Our subscription agreements generally contain multiple elements including on-demand software access, contracted message volume and optimization services. In addition, we charge fees for messages sent above the contracted level. Our subscription agreements do not provide clients the right to take possession of the software supporting the on-demand application at any time.

    In accordance with Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) No. 00-21, "Revenue Arrangements with Multiple Deliverables," or EITF 00-21, we believe all elements in our multiple element subscription agreements qualify as a single unit of accounting. In applying the guidance in EITF 00-21, we determined that we do not have objective and reliable evidence for each undelivered element of our sales agreements that contain a subscription fee for access to our on-demand software, contracted message volume and optimization services. We therefore account for our sales agreements as a single unit of accounting. Accordingly, we recognize all associated revenues ratably over the subscription period, which is typically one year in length, commencing upon the later of the agreement start date or when all revenue recognition criteria have been met. For messaging above the contracted level, revenue is recognized in the period in which the message is sent.

    Income Taxes.    We account for income taxes in accordance with FASB Statement No. 109, "Accounting for Income Taxes," or SFAS 109, which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion of all of the deferred tax asset will not be realized. We consider historical book income, the scheduled reversal of deferred tax assets, and projected future book and taxable income in making this assessment.

    Allowance for Doubtful Accounts and Allowance for Future Credits.    We maintain an allowance for doubtful accounts for estimated losses resulting from our clients' inability to pay us and an allowance for estimated future credits to be issued related to billing discrepancies or disputes. The provisions are based on our historical experience and for specific clients that, in our opinion, are likely to default on our receivables from them. In order to identify these clients, we perform ongoing reviews of all clients that have breached their payment terms, as well as those that have filed for bankruptcy or for whom information has become available indicating a significant risk of non-recoverability. To the extent that our future collections differ from our assumptions based on historical experience, the amount of our bad debt and allowance recorded may be different.

    Stock Based Compensation.    Effective January 1, 2006, we adopted FASB Statement No. 123R, "Share-Based Payment," or SFAS 123R, a revision of SFAS 123, "Accounting for Stock-Based Compensation," and related interpretations. SFAS 123R supersedes Accounting Principles Board, or APB, Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. SFAS 123R requires all share-based compensation to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable service period. We adopted this statement using the "prospective" transition method which does not result in restatement of our previously issued financial statements and requires only new awards or awards that are modified, repurchased or canceled after the effective date to be accounted for under the provisions of SFAS 123R. Prior to January 1, 2006, we accounted for stock-based compensation arrangements according to the provisions of APB 25 and its related interpretations.

    Determining the appropriate fair value model and calculating the fair value of stock-based payment awards requires the use of highly subjective assumptions, including the expected life of the stock-based payment awards and stock price volatility. We have used the Black-Scholes option-pricing model to value our option grants and determine the related compensation expense. The

40

assumptions used in calculating the fair value of stock based payment awards represent management's best estimates, but the estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock based compensation expense could be materially different in the future.

    In 2006, we used the Black-Scholes option-pricing model and the following assumptions to determine fair values of option grants and related compensation expense:

Expected dividend yield	0	%
Risk-free interest rate	4.75	%
Expected option term (in years)	6.25
Volatility	41.21	%

    We have historically been a private company and lacked company-specific historical and implied volatility information. Accordingly, we have estimated our expected volatility based on the historical volatility of our peer group consisting of publicly-held companies selected because of the similarity of their industry, business model, and financial risk profile. We intend to continue to use the same peer group to determine volatility in the future until such time that sufficient information regarding the volatility of our share price becomes available or we determine that other companies should be added or are no longer suitable.

    The expected term of options has been determined utilizing the "simplified" method as prescribed by SAB 107, "Share-Based Payment". The risk-free interest rate used for each grant is based on a U.S. Treasury instrument with a term similar to the expected term of the option. SFAS 123R also requires us to estimate forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. If our actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.

    The following table summarizes by grant date the number of shares subject to options granted between January 1, 2006 and September 30, 2007, the per share exercise price of the options and the per share estimated fair value of the options:

Grant Date	Number of Shares Subject to Options Granted	Per Share Exercise Price of Option(1)		Per Share Estimated Fair Value of Option(2)
Three months ended March 31, 2006	151,000	$	4.00	$	1.62
Three months ended June 30, 2006	—		—		—
Three months ended September 30, 2006	195,500		4.00		1.62
Three months ended December 31, 2006	113,000		4.00		1.62
Three months ended March 31, 2007	144,000		4.00		1.56
Three months ended June 30, 2007	—		—		—
Three months ended September 30, 2007	305,500		5.52		2.13

⁽¹⁾

The Per Share Exercise Price of Option represents the determination by our board of directors of the fair market value of our common stock on the date of grant.

⁽²⁾

As described above, the Per Share Estimated Fair Value of Option was estimated at the date of grant using the Black-Scholes option-pricing model. This model estimates the fair value by applying a series of factors including the exercise price of the option, a risk free interest rate, the expected term of the option, expected share price volatility of the underlying common stock and expected dividends on the underlying common stock. Additional information regarding our

41

valuation of common stock and option awards is set forth in Note 7 to our financial statements included elsewhere in this prospectus.

    Since September 30, 2007, we also have granted options to purchase an additional 452,000 shares of our common stock at an exercise price of $6.72 per share.

    We have historically granted stock options at exercise prices equivalent to the fair value of our common stock as of the date of grant as determined by our board of directors with input from management and based on a number of objective and subjective factors, including the following:

•

peer group trading multiples;



•

the amount of preferred stock liquidation preferences;



•

our results of operations and financial condition;



•

increases in the number of clients and client retention;



•

improvements in our product functionality and system infrastructure;



•

the illiquidity of shares of our common stock;



•

our future prospects and opportunity for liquidity events such as an initial public offering and possible third party sales;



•

prices paid for our preferred stock issued in arms-length transactions; and



•

independent valuations, beginning in June 2007.

    We believe our estimates of the fair value of our common stock to be reasonable.

    As discussed more fully in Note 7 to the financial statements included elsewhere in this prospectus, we granted stock options with a weighted average exercise price of $4.00 per share during 2006 and $5.03 for the nine months ended September 30, 2007. We determined that the fair value of our common stock increased from $4.00 per share in the first quarter of 2007 to $5.52 for the second quarter of 2007 and to $6.72 for the third quarter of 2007. The following discussion describes the reasons for the difference between the fair value of our common stock during this period and an estimated mid-point of the price range set forth on the front cover of this prospectus of $           per share.

    During the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, our determination of fair value was based on the factors listed above other than the independent valuations we describe below. Specifically, we increased our client base and revenues and continued to develop our product offerings and infrastructure. While our operating expenses also increased primarily due to the hiring of additional personnel, our business turned profitable for the first time in the quarter ended March 31, 2006 and has been profitable every quarter thereafter. We had no plans for an initial public offering in the near term because we did not believe that an initial public offering would be beneficial for a company of our size. In light of these general factors and based upon expressions of investment interest from third parties, our board of directors established a fair value of $4.00 per share for our common stock for these quarterly periods.

    During the quarter ended December 31, 2006, the number of our clients and our revenues continued to increase, and we significantly improved our profitability. We raised $5.0 million through the sale of Series D preferred stock at a price of $4.00 per share. The holders of Series D preferred stock are not entitled to receive any dividends or liquidation preferences, and are required to convert into common stock on a one-for-one basis upon a qualified public offering. We continued to believe that we were not in a position to complete an initial public offering in the near term. Based primarily on the per share price of the Series D preferred stock, we determined that fair value of our common stock should remain at $4.00 per share for the quarter ended December 31, 2006.

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    From January 1, 2007 to March 31, 2007, our quarterly performance improved over past quarters even though we continued to expend resources on hiring additional personnel, developing our product infrastructure and releasing new products. In January, 2007, we raised $2.7 million through a second issuance of Series D preferred stock at the same per share price of $4.00. We once again determined the fair value of our common stock to be $4.00 per share for the quarter ended March 31, 2007.

    During the quarter ended June 30, 2007, as our financial results continued to be favorable, our board of directors determined that we may be approaching the size that would permit us to successfully launch an initial public offering, although we had not yet participated in discussions with any investment bankers or other third parties regarding any such offering. For the first time, we obtained an independent valuation of the fair value of our common stock as of June 30, 2007. In July 2007, based on the results of this independent valuation, we determined the fair value of our common stock to be $5.52 per share.

    During the quarter ended September 30, 2007, we initiated discussions with investment banks about a possible initial public offering. During the quarter, we engaged investment bankers, lawyers and accountants to start the process of an initial public offering and held our initial organizational meeting. We also obtained an additional independent valuation as of September 30, 2007. In November 2007, based on the results of this independent valuation, we determined the fair value of our common stock to be $6.72 per share.

    The independent valuations used a market approach and an income approach to estimate our aggregate enterprise value at each valuation date. The market approach estimates the fair market value of a company by applying market multiples of publicly-traded firms in similar lines of business to actual and projected results. The companies used for comparison in the independent valuations were the same companies used by us in our previous peer group analysis. Additionally and although weighted less than the public company multiple analysis, the market approach also assessed data from sale transactions involving similar companies. The income approach involves applying an appropriate risk-adjusted discount rate to projected debt-free cash flows, based on forecasted revenues and costs. The projections used in connection with these independent valuations were based on our expected operating performance over the five year forecast period at the time of the independent valuation. We believe the assumptions underlying the estimates are reasonable as they are consistent with the plans and estimates we use to manage our business. The risks associated with achieving our forecasts were assessed in selecting the appropriate discount rates. Finally, the values calculated for our common stock under each approach were weighted. The resulting value represented the estimated fair market value of our common stock at each valuation date.

    There is inherent uncertainty in the forecasts and projections upon which these independent valuations were based, and if we had made different assumptions and estimates than those described above, the amount of our recognized and to be recognized stock-based compensation expense, net income and net income per share amounts could have been materially different. In addition, discounts to reflect the lack of a public market for our stock were estimated. We believe that we have used reasonable methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, in assessing the fair value of our common stock for financial reporting purposes.

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Results of Operations

    The following table sets forth selected statements of operations data for each of the periods indicated as a percentage of total revenues.

	Year Ended December 31,						Nine Months Ended September 30,
	2004(1)		2005		2006		2006		2007
							(unaudited)
Revenues	100	%	100	%	100	%	100	%	100	%
Cost of revenues	20		23		25		25		24
Gross profit	80		77		75		75		76
Operating expenses:
Sales and marketing	61		53		42		43		40
Development	22		20		16		16		17
General and administrative	8		11		8		8		7
Total operating expenses	91		84		66		67		64
Operating income (loss)	(11	)	(7	)	9		8		12
Other income (expense), net	(1	)	0		1		2		0
Income (loss) before taxes	(12	)	(7	)	10		10		12
Income tax expense (benefit)	0		0		(11	)	0		5
Net income (loss)	(12	)	(7	)	21		10		7
Accretion of redeemable preferred stock	(2	)	(2	)	(1	)	(1	)	(1	)
Net income (loss) available to common stockholders	(14	)%	(9	)%	20	%	9	%	6	%

⁽¹⁾

The year ended December 31, 2004 reflects the combined results of ExactTarget, LLC for the period January 1, 2004 through July 13, 2004 and ExactTarget, Inc. for the period July 14, 2004 through December 31, 2004.

Nine Months Ended September 30, 2007 and 2006

    Revenues.    Revenues for the nine months ended September 30, 2007 were $34.2 million, an increase of $12.2 million, or 55%, over revenues of $22.0 million for the nine months ended September 30, 2006. The growth in revenues over the period was attributable to a larger base of renewal clients, new direct client additions and higher average contract values for new direct client additions. Our client base increased to approximately 2,800 as of September 30, 2007, with new direct clients added of 780 for the nine months ended September 30, 2007. Price increases during this period did not have a material impact on our revenues. Total deferred revenue as of September 30, 2007 was $11.8 million, representing an increase of $2.7 million, or 30%, over total deferred revenue of $9.1 million as of September 30, 2006. The percentage increase in total deferred revenue was less than the percentage increase in revenues primarily due to the higher proportion of new enterprise clients who typically request periodic instead of annual billing terms.

    Cost of Revenues.    Cost of revenues for the nine months ended September 30, 2007 was $8.2 million, an increase of $2.6 million, or 46%, over cost of revenues of $5.6 million for the nine months ended September 30, 2006. The increase was primarily due to a $0.8 million increase in employee related costs due to the addition of 29 personnel from September 30, 2006 to September 30, 2007, primarily in technical support and account management related to our optimization services team. Cost of revenues also increased due to a $0.5 million increase in depreciation and a $1.0 million increase in operating costs related to site optimization and

44

scalability of our application infrastructure. Our gross profit for both periods remained constant at 75%. Capital expenditures relating to our system hardware in our co-location facilities are expected to increase over future periods, which will result in higher cost of revenues attributable to depreciation and operating costs.

    Sales and Marketing Expenses.    Sales and marketing expenses for the nine months ended September 30, 2007 were $13.8 million, an increase of $4.4 million, or 47%, over sales and marketing expenses of $9.4 million for the nine months ended September 30, 2006. The increase was primarily due to a $1.0 million increase in employee related costs due to the addition of 35 sales and marketing personnel from September 30, 2006 to September 30, 2007 and $1.5 million in higher sales commissions as a result of increased sales. It also reflects an increase in marketing programs of $0.7 million and meetings and travel expenses of $0.4 million. Our sales and marketing headcount increased as we established a dedicated account renewal team, doubled the size of our inside sales team and hired additional personnel to drive sales leads through marketing and cold calling activities.

    Development Expenses.    Development expenses for the nine months ended September 30, 2007 were $5.9 million, an increase of $2.3 million, or 64%, over development expenses of $3.6 million for the nine months ended September 30, 2006. The increase in development expenses was primarily due to a $1.3 million increase in employee related costs due to the addition of 10 personnel from September 30, 2006 to September 30, 2007 as well as a $0.2 million increase in contract development resources. Our development spending increased as we accelerated the development of our application and integrated solutions, including the launch of our Microsoft Dynamics CRM integration.

    General and Administrative Expenses.    General and administrative expenses for the nine months ended September 30, 2007 were $2.4 million, an increase of $0.6 million, or 33%, over general and administrative expenses of $1.8 million for the nine months ended September 30, 2006. The increase in general and administrative expenses was primarily due to a $0.4 million increase in employee related costs due to the addition of 11 IT, accounting and legal personnel from September 30, 2006 to September 30, 2007. Our general and administrative headcount increased as we hired additional personnel to support our growth and help us prepare to become a public company.

    Other Income (Expense).    Other income consists primarily of interest income and expense. Other income for the nine months ended September 30, 2007 was income of $0.1 million, a decrease of $0.4 million, or 80%, from other income of $0.5 million for the nine months ended September 30, 2006. This decrease in other income was primarily due to a one-time non-refundable deposit received and recognized as other income for the nine months ended September 30, 2006.

    Income Tax Expense (Benefit).    Income tax expense for the nine months ended September 30, 2007 was $1.7 million compared to no expense for the nine months ended September 30, 2006. The increase is due to tax net operating loss carryforwards that were fully reserved for in 2006 because of the history of losses. In the fourth quarter of 2006 management determined that the net operating losses would be largely utilized by 2006 taxable income and the valuation allowance was reversed. The net operating losses were fully utilized in the first quarter of 2007.

Years Ended December 31, 2006 and 2005

    Revenues.    Revenues for 2006 were $31.2 million, an increase of $11.5 million, or 58%, over revenues of $19.7 million for 2005. The growth in revenues over the period was attributable primarily to a larger base of renewal clients, new direct client additions and higher average contract values for new direct client additions. During 2006, we added approximately 920 new direct clients.

45

Price increases during this period did not have a material impact on our revenues. Total deferred revenue for 2006 was $10.3 million, representing an increase of $3.0 million, or 41%, over total deferred revenue of $7.3 million for 2005. The percentage increase in total deferred revenue was less than the percentage increase in revenues primarily due to the higher proportion of new enterprise clients who typically request periodic instead of annual billing terms.

    Cost of Revenues.    Cost of revenues for 2006 was $7.8 million, an increase of $3.2 million, or 70%, over cost of revenues of $4.6 million for 2005. The increase was primarily due to a $1.2 million increase in employee related costs due to the addition of 7 personnel from 2005 to 2006, primarily in implementation and account management related to our optimization services team. Cost of revenues also increased due to a $0.8 million increase in depreciation and a $0.6 million increase in operating costs related to site optimization and scalability of our application infrastructure. Our gross profit decreased to 75% in 2006 as compared to 77% in 2005. Cost of revenues increased by a greater percentage than the percentage growth in revenues as we invested in infrastructure and headcount in optimization services to scale with client expansion. Costs of revenues are expensed when incurred while subscription revenue is recognized ratably over the subscription contract term.

    Sales and Marketing Expenses.    Sales and marketing expenses for 2006 were $13.1 million, an increase of $2.6 million, or 25%, over sales and marketing expenses of $10.5 million for 2005. The increase was primarily due to a $0.9 million increase in employee related costs due to the addition of 14 sales and marketing personnel from 2005 to 2006 to expand our inside sales team and to build a pre-sales consulting team to assist with technical sales, and $1.6 million in higher sales commissions as a result of increased sales. Our sales and marketing headcount increased as we hired additional personnel to focus on adding new clients and increasing revenues from existing clients.

    Development Expenses.    Development expenses for 2006 were $5.0 million, an increase of $1.1 million, or 28%, over development expenses of $3.9 million for 2005. The increase in development expenses was primarily due to a $1.4 million increase in employee related costs due to the addition of 14 personnel from 2005 to 2006 offset by a decrease in contract development resources. Our development spending increased as we upgraded and expanded the capabilities of our on-demand application.

    General and Administrative Expenses.    General and administrative expenses for 2006 were $2.4 million, an increase of $0.3 million, or 14%, over general and administrative expenses of $2.1 million for 2005. The increase in general and administrative expenses was primarily due to a $0.3 million increase in employee related costs due to the addition of personnel from 2005 to 2006 offset by a $0.2 million decrease in bad debt expense recognized in that period. Our general and administrative headcount increased as we hired additional personnel to support our growth.

    Other Income (Expense).    Other income for 2006 was income of $0.5 million compared to a $24,000 expense in 2005. This increase in other income was primarily due to a one-time non-refundable deposit received and recognized as other income for 2006.

    Income Tax Expense (Benefit).    Income tax expense (benefit) for 2006 reflected a tax benefit of $3.3 million related to the reversal of the deferred tax asset valuation reserve. It was the opinion of management that it was more likely than not that the benefit of deferred tax assets associated with the net operating losses would be realized and as such the reserve was reversed. The determination for the reversal was based upon our operating income for the year. There were no income taxes in 2005 due to our net operating loss carryforwards.

46

Years Ended December 31, 2005 and 2004

    The year ended December 31, 2004 reflects the combined results of ExactTarget, LLC for the period January 1, 2004 through July 13, 2004 and ExactTarget, Inc. for the period July 14, 2004 through December 31, 2004.

    Revenues.    Revenues for 2005 were $19.7 million, an increase of $8.1 million, or 70%, over revenues of $11.6 million for 2004. The growth in revenues over the period was due principally to a larger base of renewal clients, new direct client additions and higher average contract values for new direct client additions. During 2005, we added approximately 790 direct clients. Price increases during this period did not have a material impact on our revenues. Total deferred revenue for 2005 was $7.3 million, representing an increase of $2.8 million, or 62%, over total deferred revenue of $4.5 million for 2004. The percentage increase in total deferred revenue was less than the percentage increase in revenues primarily due to the higher proportion of new enterprise clients who typically request periodic instead of annual billing terms.

    Cost of Revenues.    Cost of revenues for 2005 was $4.6 million, an increase of $2.2 million, or 92%, over cost of revenues of $2.4 million for 2004. The increase was primarily due to a $1.2 million increase in employee related costs due to the addition of 17 personnel from 2004 to 2005, primarily in technical support and account management related to our optimization services teams. Cost of revenues also increased due to a $0.6 million increase in depreciation related to site optimization and scalability of our application infrastructure. Our gross margin decreased to 77% in 2005 from 80% in 2004. Cost of revenues increased by a greater percentage than the percentage growth in revenues as we invested in infrastructure and headcount in optimization services to scale with client expansion. Costs of revenues are expensed when incurred while subscription revenue is recognized ratably over the subscription contract term.

    Sales and Marketing Expenses.    Sales and marketing expenses for 2005 were $10.5 million, an increase of $3.4 million, or 48%, over sales and marketing expenses of $7.1 million for 2004. The increase was primarily due to a $1.2 million increase in employee related costs due to the addition of 7 sales and marketing personnel from 2004 to 2005 and $1.0 million in higher sales commissions as a result of increased sales. It also reflects an increase in marketing programs of $0.6 million. Our sales and marketing headcount increased as we hired additional personnel to focus on adding new clients and increasing revenues from existing clients.

    Development Expenses.    Development expenses for 2005 were $3.9 million, an increase of $1.4 million, or 56%, over development expenses of $2.5 million for 2004. The increase was primarily due to a $1.2 million increase in employee related costs due to the addition of 15 personnel from 2004 to 2005. Our development spending increased as we upgraded and expanded the capabilities of our on-demand software.

    General and Administrative Expenses.    General and administrative expenses for 2005 were $2.1 million, an increase of $1.2 million, or 133%, over general and administrative expenses of $0.9 million for 2004. The increase in general and administrative expenses was primarily due to a $0.6 million increase in employee related costs due to the addition of personnel from 2004 to 2005 and a $0.2 million increase in bad debt expense recognized in that period. Our general and administrative headcount increased as we hired additional personnel to support our growth.

    Other Income (Expense).    Other expense for 2005 was $24,000, a decrease of $54,000 over other expense of $78,000 for 2004. This decrease in other expense was due to decreased interest expense attributable to a lower average outstanding balance on our notes payable during 2005.

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Quarterly Results of Operations

    The following table sets forth our unaudited statements of operations data for each of the eleven quarters through and including the period ended September 30, 2007. This information is derived from our unaudited financial statements, which in the opinion of management contain all adjustments necessary for a fair presentation of such financial data in accordance with United States generally accepted accounting principles. Operating results for these periods are not necessarily indicative of the operating results for a full year. Historical results are not necessarily indicative of the results to be expected in future periods. You should read this data together with our financial statements and the related notes to those financial statements included elsewhere in this prospectus.

	Three Months Ended
	Mar. 31, 2005			June 30, 2005			Sept. 30, 2005			Dec. 31, 2005			Mar. 31, 2006			June 30, 2006			Sept. 30, 2006			Dec. 31, 2006			Mar. 31, 2007			June 30, 2007			Sept. 30, 2007
	(Unaudited) (in thousands, except per share data)
Statements of Operations Data:
Revenues(1)	$	4,209		$	4,593		$	5,120		$	5,812		$	6,544		$	7,503		$	7,961		$	9,167		$	10,077		$	11,970		$	12,116
Cost of revenues		932			1,075			1,253			1,371			1,746			1,779			2,045			2,257			2,426			2,720			3,075
Gross profit		3,277			3,518			3,867			4,441			4,798			5,724			5,916			6,910			7,651			9,250			9,041
Operating expenses:
Sales and marketing		2,319			2,396			2,781			3,022			2,742			3,244			3,450			3,714			3,801			4,663			5,311
Development		857			837			1,010			1,220			1,077			1,164			1,348			1,453			1,658			1,832			2,418
General and administrative		443			495			568			588			571			563			627			654			722			875			843
Total operating expenses		3,619			3,728			4,359			4,830			4,390			4,971			5,425			5,821			6,181			7,370			8,572
Operating income (loss)		(342	)		(210	)		(492	)		(389	)		408			753			491			1,089			1,470			1,880			469
Other income (expense), net		(14	)		(11	)		(11	)		11			471			1			8			(27	)		28			52			45
Income (loss) before taxes		(356	)		(221	)		(503	)		(378	)		879			754			499			1,062			1,498			1,932			514
Income tax expense (benefit)		—			—			—			—			—			—			—			(3,285	)		628			811			216
Net income (loss)		(356	)		(221	)		(503	)		(378	)		879			754			499			4,347			870			1,121			298
Accretion of redeemable preferred stock		(105	)		(105	)		(105	)		(105	)		(105	)		(105	)		(105	)		(105	)		(105	)		(105	)		(14	)
Net income (loss) available to common stockholders	$	(461	)	$	(326	)	$	(608	)	$	(483	)	$	774		$	649		$	394		$	4,242		$	765		$	1,016		$	284
Net income per common share:
Basic	$	(0.07	)	$	(0.05	)	$	(0.10	)	$	(0.08	)	$	0.12		$	0.10		$	0.06		$	0.68		$	0.14		$	0.20		$	0.06
Diluted	$	(0.07	)	$	(0.05	)	$	(0.10	)	$	(0.08	)	$	0.05		$	0.04		$	0.03		$	0.22		$	0.04		$	0.06		$	0.01

⁽¹⁾

Revenues include fees for messages sent above the contracted level in the respective quarters as follows:

	Three Months Ended
	Mar. 31, 2005		June 30, 2005		Sept. 30, 2005		Dec. 31, 2005		Mar. 31, 2006		June 30, 2006		Sept. 30, 2006		Dec. 31, 2006		Mar. 31, 2007		June 30, 2007		Sept. 30, 2007
	(Unaudited) (in thousands)
Revenues for messages sent above the contracted level	$	619	$	590	$	759	$	823	$	877	$	1,331	$	1,124	$	1,202	$	904	$	1,552	$	1,277

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              As percentage of revenues:

	Three Months Ended
	Mar. 31, 2005		June 30, 2005		Sept. 30, 2005		Dec. 31, 2005		Mar. 31, 2006		June 30, 2006		Sept. 30, 2006		Dec. 31, 2006		Mar. 31, 2007		June 30, 2007		Sept. 30, 2007
	(Unaudited)
Statements of Operations Data:
Revenues	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%	100	%
Cost of revenues	22		23		24		24		27		24		26		25		24		23		25
Gross profit	78		77		76		76		73		76		74		75		76		77		75
Operating expenses:
Sales and marketing	55		53		55		52		42		43		43		41		38		39		44
Development	20		18		20		21		16		16		17		16		16		15		20
General and administrative	11		11		11		10		9		7		8		7		7		7		7
Total operating expenses	86		82		86		83		67		66		68		64		61		61		71
Operating income (loss)	(8	)	(5	)	(10	)	(7	)	6		10		6		11		15		16		4
Other income (expense), net	0		0		0		0		7		0		0		0		0		0		0
Income (loss) before taxes	(8	)	(5	)	(10	)	(7	)	13		10		6		11		15		16		4
Income tax expense (benefit)	0		0		0		0		0		0		0		(36	)	6		7		2
Net income (loss)	(8	)	(5	)	(10	)	(7	)	13		10		6		47		9		9		2
Accretion of redeemable preferred stock	(3	)	(2	)	(2	)	(1	)	(1	)	(1	)	(1	)	(1	)	(1	)	(1	)	0
Net income (loss) available to common stockholders	(11	)%	(7	)%	(12	)%	(8	)%	12	%	9	%	5	%	46	%	8	%	8	%	2	%

Liquidity and Capital Resources

    Since our inception, we have financed our operations primarily through the proceeds from the issuance of preferred stock, borrowings under credit facilities and cash flows from operations. At September 30, 2007, our principal sources of liquidity were cash totaling $4.7 million and accounts receivable of $8.6 million.

    In October 2004, we borrowed $300,000 under a note payable collateralized by the underlying equipment purchased with the note proceeds. The note bears interest of 4.75% and is payable in 39 monthly installments, the first three of which are interest only. The remaining 36 installments are in the amount of $9,177.

    In December 2005, we obtained a $1.7 million bank term loan that is collateralized by the underlying equipment financed and a lien on all Company assets. The loan is a variable rate loan that bears interest of prime plus one percent (8.75% at September 30, 2007) and is payable in 36 monthly installments. Under the terms of the agreement, we must maintain a quick ratio of 1.25 to 1.00 and minimum net worth requirements. The 36 monthly installments include a constant principal payment of $47,222 plus the monthly interest amount.

Operating Activities

    Net cash provided by operating activities was $5.0 million during the nine months ended September 30, 2007, $5.4 million during 2006 and $1.2 million during 2005. Net cash used in operating activities was $0.5 million during 2004. The 2006 net cash inflows resulted primarily from operating income, changes in working capital accounts and the add back of non-cash charges for depreciation, stock based compensation expense, and a reversal of the valuation allowance against deferred tax assets. The 2005 and 2004 net cash inflows and outflows, resulted primarily from operating losses, changes in working capital accounts and the add back of non-cash charges for depreciation. Cash flow from operations is also significantly impacted by collections of subscription payments in advance of those amounts meeting all criteria for revenue recognition.

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    The changes in working capital items consisted primarily of the following (in each case reflecting amounts as of the dates indicated and amount of change from the prior period):

Accounts Receivable

	As of December 31,
							As of September 30, 2007
	2004		2005		2006
							(Unaudited)
Accounts receivable	$	2,724,234	$	4,406,948	$	6,492,347	$	8,603,911
Change from prior period		1,546,856		1,682,714		2,085,399		2,111,564
% change from prior period		131%		62%		47%		33%

    The increases in accounts receivable are due to continued growth in invoiced amounts to our clients, reduced by the collections on existing receivables. Clients are generally invoiced annually or in periodic installments over the subscription period, and payment for the majority of our subscription agreements is due upon invoicing. We generally receive cash payments from subscription customers early in the revenue recognition process, which has a positive effect on our accounts receivable balances and on cash flow from operations. If our subscriptions increase, our deferred revenue and accounts receivable balances typically increase as well.

    The net cash provided by operating activities also resulted primarily from the following non cash charges, which need to be added back as an adjustment to reconcile net loss to cash provided by operating activities:

•

depreciation and amortization of property, equipment and purchased software of $1.9 million, $1.9 million, $0.9 million and $0.3 million during the nine months ended September 30, 2007 and during 2006, 2005 and 2004, respectively; and



•

stock based compensation expense of $0.2 million and $0.1 million during the nine months ended September 30, 2007, and during 2006, respectively.

    The increase in depreciation and amortization of property, equipment and software was primarily due to increased purchases of fixed assets required to support the continued growth and expansion of the business. The increase in stock based compensation was primarily due to the adoption of SFAS 123R on January 1, 2006.

    As of September 30, 2007, we had used all operating loss carryforwards available to offset payments of federal and state income tax liabilities. We have approximately $0.3 million of Indiana tax credits as of September 30, 2007 to be used to offset taxes payable to the state of Indiana. We made aggregate federal and state cash tax payments of $0.7 million for the nine months ended September 30, 2007.

Deferred Revenue

	As of December 31,
							As of September 30, 2007
	2004		2005		2006
							(Unaudited)
Total deferred revenue(1)	$	4,484,273	$	7,299,739	$	10,278,004	$	11,848,227
Change from prior period		1,736,609		2,815,466		2,978,265		1,570,223
% change from prior period		65%		63%		41%		15%

⁽¹⁾

Includes deferred revenue included in long-term obligations and other.

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    The increases in total deferred revenue are due to continued growth in invoiced amounts under our subscription agreements, offset by the recognition of revenues ratably over the term of the subscription agreement. The growth in the invoiced amounts was primarily due to subscriptions from new clients, increased subscriptions from existing clients, the introduction of new products, and the enhancement of existing products. Changes in deferred revenue generally indicate the trend for revenues over the following year as the current portion of deferred revenue is expected to be recognized within 12 months. Deferred revenue represents agreements entered into in the current and prior periods to the extent invoiced but not yet recognized to revenues, and does not reflect that portion of subscriptions to be invoiced to clients on a periodic basis for which payment is not yet due. As the number of our large enterprise clients has increased, more of our clients have requested periodic instead of annual billing terms. As a result, we believe that the amount and proportion of aggregate contract value not reflected on the balance sheet through deferred revenue may continue to increase. This trend may slow the recognition of deferred revenue, accounts receivable and cash inflow in our financial statements.

Accrued Compensation

	As of December 31,
							As of September 30, 2007
	2004		2005		2006
							(Unaudited)
Accrued compensation and related expenses	$	669,948	$	923,996	$	1,573,517	$	2,110,463
Change from prior period		292,475		254,048		649,521		536,946
% Change from prior period		77%		38%		70%		34%

    The increases in accrued compensation and related expenses were primarily due to an increase in the number and compensation of our employees and larger commissions and sales incentives. This liability has historically been higher in the fourth quarter due to increased sales activities.

Accounts Payable and Accrued Liabilities

	As of December 31,
								As of September 30, 2007
	2004		2005		2006
								(Unaudited)
Accounts payable and accrued liabilities(1)	$	524,124	$	1,348,318	$	570,553		$	991,204
Change from prior period		311,612		824,194		(777,765	)		420,651
% change from prior period		147%		157%		(58)%			74%

⁽¹⁾

Balances only reflect the portions related to cash flows from operating activities.

    The increases in accounts payable and accrued liabilities were primarily due to the timing of payments to vendors and an increase in our overall operating expenses.

Investing Activities

    Net cash used in investing activities was $5.2 million during the nine months ended September 30, 2007, and $3.8 million, $1.6 million and $1.8 million during 2004, 2005 and 2006 respectively. Net cash used in investing activities consisted primarily of cash paid for purchases of fixed assets to expand our infrastructure for our hosted software product, computer equipment and office furniture for our employees and leasehold improvements related to additional office space. We intend to continue to invest in our hosted infrastructure to support growth of clients and data, and to ensure our software is available for access in the event of disaster.

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Financing Activities

    Net cash provided by (used in) financing activities was $(0.2) million during the nine months ended September 30, 2007, and $(0.5) million, $1.8 million and $4.0 million during 2004, 2005 and 2006, respectively. Net cash used in financing activities during the nine months ended September 30, 2007 and during 2006 consisted primarily of repayments of certain borrowings pursuant to our notes payable and capital leases, partially offset by proceeds from the exercise of stock options. Proceeds from the issuance of Series D preferred stock were offset entirely by the repurchase and retirement of stock. Net cash provided by financing activities during 2005 consisted primarily of a borrowing pursuant to one of our notes payable, receipt of a non-refundable deposit and proceeds from the exercise of stock options, partially offset by the repayment of our notes payable and capital leases. Net cash provided by financing activities during 2004 was primarily proceeds from the issuance of our Series C redeemable convertible preferred stock, borrowing pursuant to one of our notes payable, and the exercise of stock options, partially offset by the repurchase and retirement of stock and repayment of our notes payable and capital leases.

    Given our current cash and accounts receivable balances and the estimated net proceeds of this offering we believe that we will have sufficient liquidity to fund our business and meet our contractual obligations for the next twelve months. However, we may need to raise additional funds in the future in the event that we pursue acquisitions or investments in complementary businesses or technologies. If we raise additional funds through the issuance of equity or convertible securities, our stockholders may experience dilution. During the last three years, inflation and changing prices have not had a material effect on our business, and we do not expect that inflation or changing prices will materially affect our business in the next twelve months.

Off Balance Sheet Arrangements

    We do not engage in any off-balance sheet financing activities. We do not have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

Contractual Obligations

    The following table summarizes our contractual cash obligations at September 30, 2007 and the effect such obligations are expected to have on our liquidity and cash flow in future periods:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 years		3-5 Years		More than 5 Years
Notes payable	$	743,566	$	601,892	$	141,674	$	—	$	—
Capital leases		31,512		31,512		—		—		—
Operating leases		5,115,534		870,053		1,769,120		1,746,764		729,597
Contractual commitments(1)		1,281,220		710,920		570,300		—		—
Total	$	7,171,832	$	2,214,377	$	2,481,094	$	1,746,764	$	729,597

⁽¹⁾

Contractual commitments primarily consist of hosting and hosting related costs for the facilities that house our software application production environment.

Qualitative and Quantitative Disclosures about Market Risk

    Foreign Currency Exchange Risk.    We believe that there is no material risk of exposure to our results of operations and cash flows due to changes in foreign currency exchange rates.

    Interest Rate Sensitivity.    Interest income and expense are sensitive to changes in the general level of U.S. interest rates. However, based on the nature and current level of our investments, which are primarily cash and debt obligations, we believe that there is no material risk of exposure.

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BUSINESS

Company Overview

    ExactTarget is a leading provider of on-demand email marketing software solutions to organizations of all sizes. Our clients depend on our solutions for business-critical marketing and event-triggered communications to increase sales, improve their return on marketing investments and strengthen customer relationships. Through our email offering and our recent expansion into emerging one-to-one marketing technologies, we help our clients deliver the right message to the right person at the right time through the right medium.

    Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our scalable and modular multi-tenant architecture enables us to serve enterprise as well as small and medium size organizations with a single instance of our software. Through our integration capabilities, our clients can easily incorporate ExactTarget functionality into critical business systems such as CRM, web analytics and marketing automation programs, and we have developed standardized integrations with Salesforce and Microsoft Dynamics™ CRM. Our software solutions are complemented by our optimization service offerings, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting.

    Our sales and marketing efforts are focused on adding new clients and expanding relationships with existing clients. Our field sales team, based in over 20 U.S. markets, sells directly into the enterprise business market via an in-person sales approach, while our inside sales force sells to small and medium size organizations primarily via telesales. Our sales teams are supported by marketing efforts focused on internet-based lead generation, development of partner relationships and sponsored industry events and conferences. Our indirect sales efforts are focused on building channel relationships with value-added resellers, marketing service providers and other embedded partners.

    We provide our solutions through annual subscriptions with additional usage-based pricing for email messaging above contracted levels. As of September 30, 2007, our direct client base consisted of more than 2,800 organizations of all sizes, which included approximately 400 marketing service providers. Through these marketing service providers, more than 2,000 additional organizations utilize our technology. Many of our clients are well known companies or organizations such as Careerbuilder.com, Expedia.com, Florida Power and Light, Gannett Co., Inc./USA TODAY, the Indianapolis Colts, The Leukemia & Lymphoma Society, Liberty Mutual Group, Papa John's and Wellpoint, Inc. We have achieved 27 consecutive quarters of organic revenue growth, and no single client represented more than 3% of our revenue in the nine months ended September 30, 2007. We achieved revenues of $19.7 million and $31.2 million for 2005 and 2006, respectively. Our operating income increased from a loss of $1.4 million to income of $2.7 million during the same period.

    We were organized as ExactTarget, LLC, an Indiana limited liability company, in December 2000 and merged into ExactTarget, Inc., a Delaware corporation, in July 2004.

Industry Background

    In today's media-saturated environment, gaining a customer's attention is increasingly difficult. Therefore, it is a competitive imperative for organizations to deliver personalized, relevant and timely marketing messages. This is achieved by leveraging customer relationship data to optimize every interaction with individual customers. In the past, marketers relied heavily on one-way communication methods such as direct mail, newspaper, radio and television advertising, which can be slow to implement, impersonal and costly. Digital and interactive communication mediums such as email are growing rapidly because they allow for personalization on a mass scale, while reducing

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the time and cost required to reach customers. Additionally, email solutions allow marketers to test, track and optimize communications in real time. According to a 2007-2008 Direct Marketing Association report, email marketing returned an estimated $51.58 of sales for each dollar spent in 2006, which compared to an estimated $21.10 for non-email internet marketing, $17.07 for newspaper, $15.64 for direct mail, $8.68 for radio and $6.94 for television.

Market Opportunity

    The demand for email marketing products and services is large and growing, driven by organizations' desires to leverage the efficiency and effectiveness of this marketing channel. According to Forrester Research, the size of the U.S. email market for technology and services related to integration, strategy, delivery, creative and analytics is expected to grow from $2.3 billion in 2007 to $3.5 billion in 2010, representing a compound annual growth rate of 15%. We believe these segments of the market will grow at a higher rate due to increased outsourcing to email providers as well as growth in event-triggered email communications. Additionally, we believe our total addressable market opportunity will be larger as organizations embrace emerging one-to-one marketing technologies such as SMS, RSS, web landing pages and automated voice solutions.

Market Challenges

    Most organizations understand that effective email communications can increase sales, improve their return on marketing investment and strengthen customer relationships. However, organizations often lack the internal processes and systems needed to formulate, personalize, test, deliver and track the effectiveness of email marketing programs. Marketing professionals considering the adoption or expansion of email marketing programs face many challenges, including the following:

•

Sophisticated applications are typically difficult to use.    The complexity of many email applications requires technical expertise such as HTML programming, knowledge of scripting languages and database querying to successfully execute email marketing programs. This complexity and resulting reliance on technical staff increases production time related to marketing communications and often forces marketing professionals to focus on email execution rather than strategy and optimization.



•

Applications are unable to scale to meet evolving client needs.    While entry level email marketing solutions allow companies to quickly adopt email marketing, these applications lack the flexibility, advanced functionality and scalability to meet evolving client needs.



•

Complex infrastructure requirements.    Given the critical nature of email communication and event-triggered messages, organizations require 24/7 application availability, high volume transaction processing and robust data storage. In order to meet these requirements, organizations must make significant investments in technical expertise, data storage and security and complex infrastructure.



•

Inability to integrate data and processes across marketing channels.    There has been a proliferation of customer data generated by digital marketing channels and other initiatives such as web analytics and sales force and call center automation. As a result, it is difficult for organizations to integrate disparate data sources and marketing applications to generate a single, unified customer view in order to effectively target and deliver personalized and relevant communications.



•

Changing deliverability standards and compliance requirements.    Marketers must understand and adhere to the changing delivery standards of leading ISPs in order to ensure messages reach their subscribers' inboxes. In addition, organizations must maintain compliance with state,

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federal and international laws governing the delivery of email, including the federal CAN-SPAM Act.

Our Solutions

    Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications. Our clients also utilize our software for sending and managing a wide range of event-triggered communications such as billing statements, transaction notifications and alerts. These business-critical communications require best-in-class functionality and services. We believe our solutions offer the following key benefits:

•

Easy to deploy, cost effective and simple to use.    Our intuitive user interfaces and workflow have been designed to enable marketing professionals, with little or no technical background, to create highly targeted and customized one-to-one marketing communications. While easy to use and deploy, our solutions manage email marketing programs for the most sophisticated and demanding organizations. Additionally, our on-demand software and subscription access model significantly reduce our clients' up-front costs, need for IT assistance and implementation timeframes.



•

Modular product offering meets diverse and evolving client needs.    We offer four editions of our on-demand software—Core, Advanced, Enterprise and Agency—allowing organizations to select the appropriate level of functionality for their needs. In addition, our on-demand architecture and modular product offering enable our clients to easily add functionality as they increase their email marketing use and sophistication. This product architecture also enables us to serve small and medium size organizations as well as large distributed enterprises with complex email marketing requirements.



•

Automate marketing processes.    Our solutions enable marketers to automate processes required to deliver highly relevant and timely communications. Through our interface, marketers can define, schedule, modify and save complex programs that deliver ongoing, automated event-triggered communications. Automating these processes enables marketers to focus on strategic marketing initiatives rather than the administration of ongoing or repeated customer communications.



•

Integration across internal and external applications.    Our open web services-based architecture enables our solutions to be easily integrated with a wide range of third party service providers and with our client's in-house applications. Our standardized integrations with CRM software products such as Salesforce and Microsoft Dynamics™ CRM, as well as our partnerships with web analytics vendors such as Omniture, WebTrends and Coremetrics, enable our clients to better leverage customer data to deliver personalized and relevant communications.



•

Reliable and scalable technology infrastructure.    Our technology infrastructure supports large transactional volumes and allows our clients to store large amounts of data without limits while maintaining high application availability that is essential for their business-critical communications.



•

Embedded deliverability and functionality to assist with CAN-SPAM Act compliance.    The complex technical and legal environment for email delivery can present a significant obstacle to achieving success with any given email marketing program. We solve challenging issues associated with deliverability and help our clients with CAN-SPAM Act compliance through embedded functionality within our application, which is enhanced via our ISP relationships and our knowledge and experience regarding regulatory matters and deliverability standards.

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•

Measurable results via reporting and analytics.    Marketing departments, are under increased pressure to track spending, processes and approvals, as well as to justify marketing investment spend through ROI and other analyses. Through our interface and integration with the leading CRM and web analytics providers, we offer robust reporting and analytics functionality.

Our Strategy

    Our mission is to be the leading provider of on-demand, one-to-one marketing software and services, enabling organizations of all sizes to increase sales, optimize marketing investments and strengthen customer relationships. Key elements of our strategy include:

•

Maintaining focus on email marketing solutions.    We will continue our focus on permission-based email marketing, which we believe represents a large and growing opportunity. Our deep understanding of this market allows us to provide solutions that meet the evolving needs of organizations of all sizes by developing new functionality, enhancing our service offerings and extending our integration capabilities.



•

Expanding direct and indirect sales.    We will continue expanding our direct sales force and our indirect distribution channels in order to acquire new clients. To complement our direct sales efforts, we intend to significantly expand our indirect sales channels by growing our relationships with marketing service providers, value-added resellers and embedded partners. We believe our indirect distribution strategy will allow us to cost effectively expand our market reach.



•

Increasing revenue from current clients.    With over 2,800 direct clients, we believe there are many opportunities to sell additional products and services to our current client base and to grow revenue per client. Revenue from our existing clients increases in four primary ways: increased email volume, upgraded product functionality, purchase of additional optimization services and addition of users through broader adoption across the enterprise.



•

Extending product offering into emerging one-to-one marketing technologies.    As communication channels continue to evolve, we anticipate that emerging forms of digital one-to-one marketing will increase in importance. Accordingly, we have recently extended our marketing solutions beyond email to include SMS, web landing pages and integration with permission-based automated voice communication solutions. Our integrated platform will enable our clients to manage multiple one-to-one communication channels from within a single application.



•

Increasing our presence internationally.    We believe the market for email and emerging one-to-one marketing technologies represents a significant global opportunity. In 2006, we generated less than 5% of our revenue from markets outside of the United States. We anticipate growing international revenues through an increased sales and marketing presence in markets outside of the United States.



•

Selectively pursuing acquisitions.    The fragmented nature of our market provides opportunities for selected acquisitions. We intend to explore acquisition opportunities of companies and technologies which would either expand the functionality of our solutions, provide access to new clients or markets, or both.

Our Products and Services

    Our on-demand software enables our clients to easily create, target, deliver, track and manage permission-based email marketing communications and, through our recent release, leverage emerging one-to-one technologies like SMS, web landing pages and automated voice solutions. Our scalable and modular multi-tenant architecture enables us to serve enterprise as well as small and

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medium size organizations with a single instance of our software. Our clients can easily integrate our functionality into business-critical systems such as CRM, web analytics and marketing automation programs, and we have developed standardized integrations with Salesforce.com and Microsoft Dynamics™ CRM.

    Our software solutions are comprised of four editions of our ExactTarget application, as well as integrated and embedded products. We also offer optimization services, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services.

    The following diagram illustrates the foundational capabilities of our application (create, target, deliver, track and manage messages) and their application to email marketing, triggered and transactional messages and emerging one-to-one technologies such as SMS, voice messages and landing pages.

ExactTarget Application

    Our software editions—Core, Advanced, Enterprise and Agency—allow our clients to select the appropriate level of functionality for their needs. Our modular product design also enables our clients to easily add functionality as they increase their email marketing use and sophistication. Each edition is briefly described below:

•

Core Edition—is designed to help small and medium size organizations as well as departments within large organizations to leverage their customer data to send targeted and relevant email communications. Comprehensive and easy-to-use functionality includes content management tools such as image, document, content and survey libraries; subscriber management capabilities via opt-in forms, profile and preference attributes and group segmentation tools; and real-time tracking including emails bounced, delivered, opened, links clicked and other email performance metrics.



•

Advanced Edition—is tailored to meet the needs of the most sophisticated email marketers. In addition to the capabilities included in the Core Edition, functionality includes advanced

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features such as content syndication, dynamic content, relational data, automated interaction management, triggered and transactional communications and advanced reporting. The Advanced Edition also includes full access to ExactTarget AMP—our Application Programming Interface (API) and developer tools, which facilitate integration with other business systems.

•

Enterprise Edition—is built for distributed organizations that seek centralized control and compliance management for their email marketing communications. In addition to the capabilities included in the Advanced Edition, standard functionality includes international sending, content locking and publishing, account provisioning, advanced role and permission administration, and enterprise tracking and reporting.



•

Agency Edition—enables marketing service providers to provide an email marketing solution to their customers with a branded, private-label edition of our software. Utilizing our interface, marketing services firms can provision, configure and manage their customer accounts, through either a Core, Advanced or Enterprise edition of our software. They also receive access to our Agency Partner Portal which includes message boards, white papers and other resources.

ExactTarget Integrated

    We offer integrated products with leading CRM providers Salesforce.com and Microsoft Corporation. These standardized integrations are based on a single data model approach which eliminates the need for synchronization between applications, thus saving time and reducing import, export and unsubscribe management errors. These integrations enable organizations to leverage the customer data contained in their CRM programs in order to send targeted emails from our infrastructure, thus benefiting from our superior deliverability technology and expertise. Additionally, based on client preference, we transfer tracking results from email programs that are executed by our application back into the CRM system for further reporting and behavioral analysis. Our CRM integrated products include:

•

ExactTarget for Salesforce AppExchange—voted "Best in Show" at Dreamforce 2006 (awarded to best AppExchange integration), this integrated product enables marketers and salespeople to access our functionality from within the Salesforce interface.



•

ExactTarget for Microsoft Dynamics™ CRM—this integrated product enables organizations which have installed Microsoft Dynamics™ CRM on-premise to utilize the full range of our on-demand functionality.

    We also integrate with leading web analytics providers to automate the transfer of website visitor information into our application and return email link tracking information from our application to the web analytics platform. These integrations deliver two primary benefits—first, they enable marketers to send more targeted email communications based on their subscribers' website behavior and second, they enable marketers to measure their return on investment by tracking subscriber progress from email to website conversion. Our offerings integrate with web analytics platforms such as:

•

Omniture Genesis;



•

WebTrends' Open Exchange; and



•

Coremetrics' Livemail 2.0.

ExactTarget Embedded

    Through ExactTarget AMP, our Application Programming Interface and developer tools, we offer our email platform as a set of web services to independent software vendors and other software developers who embed our functionality into their applications. This enables software providers to

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leverage our functionality, infrastructure and deliverability expertise in their own applications, thereby significantly reducing their time to market and their upfront and ongoing cost of development and operations. We have delivered our embedded solutions to software providers in such diverse businesses as social networks, online sweepstakes, e-commerce, non-profit fundraising and on-demand print.

Optimization Services

    Our software solutions are complemented by our optimization service offerings, which include technical support, training and implementation, integration, account management, deliverability, design and deployment and strategic consulting services. These services help our clients effectively utilize our on-demand software and optimize their online marketing investments. We believe that providing optimization services is critical to building client loyalty and expanding and retaining our client base.

    Our optimization service offerings include:

•

Technical support.    Our technical support personnel are generally available 24 hours a day, 365 days a year by phone or email at no additional cost to the client. We also offer fee-based premium support, which includes access to dedicated support personnel by phone, email or instant message.



•

Training and implementation.    We offer a variety of methods of introduction to our products, including self-help resources, web-based and on-site training, agency and enterprise workshops and "train the trainer" programs. Clients purchasing implementation services are assigned an implementation consultant who works closely with them to accomplish the successful adoption and deployment of our solutions.



•

Integration.    Through our APIs, our application can be integrated with CRM, web analytics, content management or other proprietary systems. Our integration consultants assist our clients in understanding the integration capabilities of our products, utilizing our API guide and development portal, and designing solutions that meet their business needs.



•

Account management.    Working as our clients' primary contact and conduit to specialized ExactTarget optimization service teams, our account management team helps clients best use our products to optimize performance and achieve their business goals. Account managers provide ongoing guidance and analysis, including email performance reports, industry benchmarking reports, and quarterly account reviews.



•

Deliverability.    We optimize the deliverability of our clients' messages to their customers via proprietary technology, expert personnel and consultation, and deep industry and ISP relationships. Through our proprietary Deliverability Report Card™ service, we help our clients track their deliverability success and analyze and resolve any potential delivery issues. Our deliverability analysts also enforce our anti-spam policies and maintain contacts with major ISPs to resolve issues that may impact the deliverability of our clients' communications.



•

Design and deployment.    Some clients choose to engage our design and deployment team rather than manage their email programs in-house. Our design and deployment team helps these clients optimize their email marketing efforts by designing, delivering and managing all aspects of their email marketing programs.



•

Strategic consulting.    Our strategic services team helps our clients increase their return on investment and meet the increasing need for marketing accountability. We have developed a proprietary email marketing eValuation model to assess the effectiveness of client email programs. This analysis enables our strategists to identify the core elements of an email program that need improvement and drives the development of a prioritized strategic roadmap.

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Clients

    As of September 30, 2007, we had more than 2,800 direct clients, which included approximately 400 marketing service providers. Through these marketing service providers, more than 2,000 additional organizations utilize our technology, many of which are small or medium size organizations.

    In contrast to our competitors, we serve a wide range of clients, across many industries. Our clients include organizations with fewer than 150 employees, as well as well-known Fortune 500 companies. No single client represented more than 3% of our revenues in the nine months ended September 30, 2007 and our top ten clients accounted for less than 8% of our revenues for the same period. Set forth below is a representative list of our larger clients, grouped by industry:

Industry	Clients
Retail / Consumer Products	Canadian Tire Finish Line Herbalife Papa John's The Scotts Company
Healthcare / Pharmaceuticals	Allscripts Healthcare Solutions GE Healthcare Revolution Health Group LLC Wellpoint, Inc.
Financial / Insurance	Charles Schwab & Co. Inc. Genworth Financial Liberty Mutual Group Nationwide Mutual Insurance Company
Travel / Leisure	Expedia.com Hershey Entertainment & Resort Company Hotels.com Icelandair Rewards Network
Technology / Internet	Ariba, Inc. Careerbuilder.com Salesforce.com TicketsNow WebTrends Inc.
Media / Publishing	Angie's List BNP Media Gannett Co., Inc./USA TODAY McClatchy Interactive U.S. News & World Report
Government / Not-For-Profit	Emory University Indiana University Alumni Association The Leukemia & Lymphoma Society Sigma Theta Tau UK Trade & Investment

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Client Case Studies

    The selected client case studies below demonstrate the variety of benefits that many organizations have experienced using our solution.

Ariba, Inc.

    As the leading provider of Spend Management solutions, Ariba helps companies analyze, understand, and manage their corporate spending to achieve increased cost savings and business process efficiency. Ariba needed an email marketing system that integrated with their CRM application for managing customer and prospect communications. Ariba utilized our Core Edition, coupled with our ExactTarget for AppExchange standardized integration with Salesforce, to meet this need. Ariba has experienced the following key benefits:

•

ability for Ariba to track each email campaign as an "activity" inside of their Salesforce interface, providing their account executives with improved visibility into the content and frequency of marketing communications efforts;



•

reduced list attrition due to the ability of subscribers to select from a list of publications in the profile center hosted by us rather than unsubscribe from all Ariba communications; and



•

improved ability to manage Ariba's email contact strategies by utilizing our tools for creating, delivering and tracking prospect and customer email communications.

Careerbuilder.com

    Careerbuilder.com offers an online and print network that helps job seekers connect with the right employers. Prior to initiating use of our software solutions, Careerbuilder.com sought assistance increasing conversion rates. Careerbuilder.com started with the our Advanced Edition for their business-to-consumer efforts in communicating with their job-seeking subscriber base and later added the ExactTarget Enterprise Edition for their business-to-business, corporate communications efforts. Careerbuilder.com leveraged our advanced targeting and data-driven design capabilities, coupled with our strategic and design services, to test over 13,000 email design combinations. Careerbuilder.com has experienced the following key benefits:

•

improved subscriber targeting and email program reporting;



•

improved testing and evaluation of email design and content; and



•

an 88% increase in job applications via their job seeker email in July 2007 testing compared to the previous template.

Hershey Entertainment & Resorts Company

    Hershey Entertainment & Resorts is a premier entertainment and hospitality company that includes Hershey Park, the Hotel Hershey and other holdings. Prior to initiating use of our software solutions, the company was challenged with rolling out consistent branding and email marketing capabilities across its businesses, and needed an email service provider that could provide tools for list growth, segmentation and deliverability optimization. Hershey Entertainment & Resorts Company utilized our Enterprise Edition and integration capabilities to meet these needs. Hershey Entertainment & Resorts Company has experienced the following key benefits:

•

created a seamless experience for their subscribers by implementing a custom profile center that is an exact replica of the Hersheypa.com sign-up page;



•

increased list growth month over month in each of its brands after implementing an integrated profile center; and

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•

reduced subscriber attrition by allowing subscribers to "opt-down" from a list while continuing to receive email from other Hershey Entertainment & Resorts properties.

Leukemia & Lymphoma Society

    The Leukemia & Lymphoma Society, or the Society, is the world's largest voluntary health organization dedicated to funding blood cancer research, education and patient services. Prior to utilizing our software solutions, the Society was challenged with rolling out email capabilities to over 65 chapters across the country. The Society leveraged our Enterprise Edition, lock and publish capabilities, email design functionality, automated reply mail management, as well as our deliverability toolset and services to optimize their communications. The Society experienced the following key benefits:

•

improved consistency, design and branding for email communications across all chapters;



•

reduced spam complaints due to enhanced ISP complaint reporting, unsubscribe processing, and list hygiene and branding initiatives; and



•

over 100% increase in open rates and over 200% increase in click-throughs in the weeks following the re-opt-in campaign to their corporate monthly newsletter in March 2006.

TAC

    TAC is a leading building automation solutions provider with partners and branches in 80 countries. Prior to initiating use of our software solutions, TAC was faced with challenges such as alignment, adoption and efficiency of global email marketing programs and CAN-SPAM compliance. Utilizing our Enterprise Edition, and multi-lingual text capabilities, TAC executed an international email marketing roll-out across the Americas, Asia-Pacific and Europe. TAC has experienced the following key benefits:

•

enablement of users in multiple countries with easy-to-use applications and online training resources;



•

better understanding of its internal business and customer needs through embedded survey functionality; and



•

improved control and compliance of firm-wide brand marketing initiatives utilizing lock and publish and email communication archive functionality.

TicketsNow

    TicketsNow sells premium live event tickets on the secondary market. Prior to initiating use of our software solutions, TicketsNow was experiencing increased customer acquisition costs and sub-standard ROI from its email channel. TicketsNow uses the our Advanced Edition and our dynamic merchandising and triggered marketing capabilities to send targeted emails to customers that abandon their online shopping cart prior to completing a purchase. TicketsNow has experienced the following key benefits:

•

delivery of more targeted, time-sensitive and relevant communications;



•

increased online conversion rates; and



•

increased email marketing channel revenue.

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Sales and Marketing

    We sell our solutions primarily through our direct sales organization and to a lesser extent through indirect channels. Our field sales team, based in over 20 U.S. markets, sells through an in-person sales approach and focuses its efforts on organizations with 150 employees or more. This regional approach enables us to build relationships with prospects via influential local organizations such as business marketing associations, software and advertising clubs and chambers of commerce. Our inside sales team consists of over 20 employees and sells to organizations with less than 150 employees, primarily via a telesales approach. This team principally works with prospects which have been qualified by our lead qualification team and often conducts web-based product demonstrations to illustrate our capabilities. We utilize a disciplined sales process to monitor and evaluate our sales activity pipeline from lead identification and evaluation, sales contacts, opportunity valuation and closing. Field and inside sales personnel are supported by our sales operations team, consisting of sales trainers, solution consultants and business analysts.

    Our indirect sales efforts are focused on building channel relationships with marketing service providers, value added resellers and embedded partners. We sell through approximately 400 marketing service providers such as Aspen Marketing Solutions, Brulant, Customer Portfolios, ePrize and Resource Interactive, that service over 2,000 organizations using our solutions. Sales through these marketing service providers accounted for less than 20% of our aggregate contract value for the fiscal year ended December 31, 2006. Emerging indirect channels include Microsoft value-added resellers selling our integrated product with Microsoft Dynamics™ CRM and independent software vendors and software developers selling our embedded solutions. We believe these emerging indirect channels will help us reach new markets and cost effectively scale our sales efforts. We also sell through dedicated value-added resellers in the UK and Australia. Sales to clients outside of the United States accounted for less than 5% of our revenue for the fiscal year ended December 31, 2006.

    Our direct and indirect sales efforts are supported by our marketing initiatives. Collectively, these activities are designed to generate leads, educate our clients and further drive client loyalty and retention. These initiatives are intended to establish our company as a thought leader in the effective and responsible use of email marketing and emerging one-to-one technologies. Our marketing programs include email newsletters, use of our website to provide product and company information as well as to post blogs, whitepapers and other information, advertising in both print and online media, search engine marketing, issuing press releases on a regular basis and exhibiting at partner events, trade shows and industry conferences. We also host our own events, including our recent Connections '07 user conference, which was attended by more than 500 clients. We also benefit from unpaid lead sources, including word-of-mouth referrals and click-throughs on the "powered by ExactTarget" logo contained in the footer of our clients' outbound emails.

Technology

    Our on-demand software is built on a highly scalable, multi-tenant architecture which enables us to serve all of our clients from a single instance of our software. Because each new client is provisioned within this already-existing infrastructure, we believe we can efficiently scale our solutions as our business, and our clients' businesses, grows. Scalability is achieved through advanced application partitioning that allows for horizontal scaling across multiple parts of our application. Each application partition can be scaled independently of other application partitions. Examples of partitions include our user interface, API, message building, message transferring, analytics and tracking, database management, image management, and reporting. Through virtualization technology, new capacity can be provisioned as it is needed within an application partition. This virtualization approach allows for effective management of peak usage periods.

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    Our application is written in C# for the .NET framework, and we use commercially available hardware and a combination of proprietary and commercially available software, including Microsoft SQL Server and Microsoft Windows. Every page of our on-demand software is dynamically rendered for each specific user. Our clients access our solutions through a web browser without installing any software or downloading Java applets, Microsoft ActiveX, or .NET controls.

    We own all of the hardware deployed in support of our software. Our system hardware is co-located in a hosting facility operated by a third party in Indianapolis, Indiana. This facility provides around-the-clock security personnel, video surveillance and biometric access screening, and is serviced by onsite electrical generators, fire detection and suppression systems. The facility has multiple Tier 1 interconnects to the Internet. We have also entered into an agreement for a second co-location facility in Las Vegas, Nevada. This second facility will enable us to further increase application availability and redundancy, which are essential to support the business-critical communications of our clients.

    We regularly monitor the performance and availability of our software applications. We have a highly available, scalable infrastructure that utilizes load-balanced web server pools, redundant interconnected network switches and firewalls, intrusion detection, replicated databases, and fault-tolerant storage devices. Production data is backed up on a daily basis and stored in multiple locations to ensure transactional integrity and restoration capability. Application monitoring includes automated tools that ensure our software is running and operating within performance benchmarks. In addition, we have system engineers who proactively monitor the status and effectiveness of our application as well as manage email delivery into domains such as AOL, Yahoo, MSN, and Google. We regularly use third party firms to perform security audits that test all elements of our application and infrastructure security.

Competition

    The market for email marketing products and services is fragmented, competitive and rapidly evolving, and there are relatively low barriers to entry into this market. Most of our competitors generally focus on either the small business market or the enterprise market. Consequently, we believe that the market for medium size organizations is largely underserved. In contrast to our competitors, we serve a wide range of clients, including small, medium and enterprise organizations, with various editions of our software designed to meet the unique needs of each market segment. We have a number of competitors that are focused on the enterprise market, including CheetahMail Inc. (a subsidiary of Experian Group Limited), e-Dialog, Inc., Epsilon Data Management, LLC (a subsidiary of Alliance Data Systems Corporation), Responsys, Inc. and Silverpop Systems Inc. Other companies are focused on the small business market, including Constant Contact, Inc., VerticalResponse, Inc. and Got Corporation.

    We also face competition from marketing service providers as well as from in-house solutions that our clients may develop. We expect to encounter new and evolving competition as the market for on-demand email and one-to-one marketing products and services consolidates and matures and as email becomes more integral to many business and consumer applications. If one or more of our competitors were to merge or partner with another of our competitors or a new market entrant, the change in competitive landscape could adversely affect our ability to compete effectively.

    We may also face future competition from new companies entering our market, which may include large, established companies, such as Microsoft Corporation, Google Inc. and Yahoo! Inc., each of which currently offer email applications, and CRM and web analytics and marketing automation providers. Barriers to entry into our market are relatively low, which allows new entrants to enter the market without significant impediments and large, established companies to

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develop their own competitive products or acquire or establish cooperative relationships with our competitors.

    As we deploy solutions involving emerging one-to-one communication channels such as SMS, web landing pages and automated voice solutions, we may face competition from established vendors in these market segments. As these channels become more developed and the level of marketing investment focused on these channels continues to grow, it is also possible that other well-established organizations will enter this market to take advantage of this growing opportunity.

    We believe the following are the principal competitive factors in the market for email marketing products and services:

•

breadth and depth of product functionality;



•

product scalability, performance, reliability and security;



•

high availability;



•

deliverability rates;



•

ease of use;



•

ease of integration with third party applications;



•

ability to interface with emerging one-to-one marketing technologies such as SMS and voice;



•

availability and quality of technical support;



•

availability and quality of consulting services;



•

price; and



•

name recognition and brand reputation.

    Our existing and future competitors may have significantly greater financial, technical, marketing and other resources than we do and may be able to devote greater resources to the development, promotion, sale and support of their products and services. These competitors may be in a better position to respond quickly to new technologies and may be able to undertake more extensive marketing programs. Our competitors may have more extensive client bases and broader client relationships than we do. In addition, our competitors may have longer operating histories and greater name recognition than we do.

Government Regulation

    The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (the "CAN-SPAM Act"), prohibits and criminalizes predatory and abusive commercial email practices. The CAN-SPAM Act restricts the transmission of certain emails that do not include proper disclosures regarding their nature or origin. The CAN-SPAM Act specifically prohibits transmissions by initiators of commercial emails when a recipient has "opted-out" of receiving such transmissions from the sender. Violations of the CAN-SPAM Act, depending on their nature, carry civil and criminal liability.

    Our clients may be subject to the requirements of the CAN-SPAM Act and/or other applicable state or foreign laws regulating the distribution of email. If our clients' email marketing programs are alleged to violate applicable laws regulating the distribution of email and we are deemed to be responsible for such violations, or if we were deemed to be directly subject to and in violation of these requirements, it is possible that we could be exposed to liability. To help manage this risk we require compliance certifications from our clients, include indemnity provisions in our standard agreements and take other steps to help our clients stay in compliance with the CAN-SPAM Act.

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    The Federal Trade Commission is primarily responsible for enforcing the CAN-SPAM Act, and the Department of Justice, certain other federal agencies, state attorneys general and internet service providers also have authority to enforce certain of its provisions.

    The following are prohibited under the CAN-SPAM Act:

•

hiding email origin using other computers (hacking and relaying);



•

false or misleading email header information; and



•

deception in registration of email and domain names and ownership of intellectual property addresses.

    Specifically, the CAN-SPAM Act requires the following:

•

all commercial email must contain a valid opt-out mechanism that gives recipients the opportunity to opt-out of receiving future commercial email messages from the sender for at least 30 days after the initial email is sent;



•

opt-out requests must be honored within 10 business days;



•

the sender must include a valid physical postal address;



•

commercial email sent to recipients that have not given prior affirmative consent to receipt of the message (that is, an "opt-in") must provide a clear notice that it is an advertisement;



•

senders must avoid false, deceptive or misleading email transmission information or subject lines; and



•

senders must label sexually-oriented messages.

    Many states have also passed laws regulating commercial email practices that typically provide a private right of action and specify damages and other penalties in addition to those imposed by the CAN-SPAM Act, which in some cases may be substantial. Some of these state laws are significantly more punitive and difficult to comply with than the CAN-SPAM Act. Utah and Michigan, for example, have enacted do-not-email registries listing minors who are registered to avoid receipt of unsolicited commercial email that markets certain covered content, such as adult or other products the minors cannot legally obtain. The CAN-SPAM Act preempts, or blocks, most state laws that expressly regulate the use of email to send commercial messages, except to the extent that any such law prohibits falsity or deception in any portion of a commercial email message or information attached thereto. However, the scope of these exceptions is not settled. Further, the CAN-SPAM Act does not preempt the applicability of state laws that are not specific to email, such as state trespass, contract or tort law.

    In addition, certain foreign countries, including the countries of the European Union, have enacted laws that regulate sending email and the online collection and disclosure of personal information, some of which are more restrictive than United States laws. For example, some foreign laws prohibit sending unsolicited email unless the recipient has provided the sender advance consent to receipt of such email, or in other words has "opted-in" to receiving it. Foreign governments may attempt to apply their laws extraterritorially or through treaties or other arrangements with United States governmental entities.

    We are strong advocates of permission-based email marketing. We use the phrase "permission-based email marketing" to refer to the practice of sending email to our clients' customers only if such customers have affirmatively opted-in to receive any, or a specific type, of email from our client, through our system. Our standard terms and conditions require our clients to comply with any international, federal, state, or local law or regulation relating to individual privacy or the distribution of email messages. We have taken additional steps to facilitate our clients' compliance

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with the CAN-SPAM Act through the adoption of our Anti-Spam Policy which provides that our clients:

•

use our software only to send emails to customers and prospects that have directly consented (opted-in) to receiving their email;



•

will not use our system to send unsolicited email;



•

will provide us with the source of the email addresses, the method used to capture the data, and verification of the consent to receive emails from such client for any list of email addresses used in our system;



•

will not use rented or purchased lists, email append lists, or any other list that contains email addresses captured using any other method than opt-in; and



•

will not use opt-out lists in our system.

    We retain the right to review customer lists and emails to verify that clients are abiding by our Anti-Spam Policy. However, our clients are ultimately responsible for compliance with our policies.

    As we expand our offerings to include new functionality such as sending voicemail messages, text messages (SMSs) and/or other forms of one-to-one communications, other domestic and international laws and regulation may cover sending such communications. Many states have passed laws regulating telemarketing activities and establishing do-not-call lists or registries which preclude certain telemarketing calls to registered numbers. Some states also require telemarketers to register with the state or follow other procedures in conducting telemarketing programs, in some cases including checking do-not-call list registered numbers prior to calling, in an effort to discourage consumer fraud and deception by firms in telemarketing activities. Further, the FTC has implemented rules under the Telemarketing and Consumer Fraud and Abuse Prevention Act; including the Telemarketing Sales Rule, which requires, among other things, that certain telemarketers refrain from contacting numbers on the federal do-not-call list.

    Further, the Federal Communication Commission has implemented rules pursuant to the CAN-SPAM Act regulating sending commercial e-mail messages to wireless devices. Some states, for example California, have likewise implemented laws restricting sending text messages. Under FCC rules, unless a consumer has provided express prior authorization to receipt of a commercial message, sending the message is typically prohibited. Some exceptions exist, such as when the sender and the recipient have an established business relationship. The FCC established a wireless domain list on which wireless services providers were required to list internet domain names used to transmit electronic messages to wireless devices, and within thirty days of posting a domain to the list, non-exempt senders must not send unsolicited commercial messages to any internet address containing a domain name on the list.

    If we were found to be in violation of any of these laws, rules, or regulations, or foreign laws regulating the distribution of voicemail or messages, whether as a result of violations by our clients or if we were deemed to be directly subject to and in violation of these requirements, we could be exposed to one or more of the following consequences:

•

payment of statutory, actual or other damages;



•

criminal penalties;



•

actions by state attorneys general;



•

actions by private citizens or class actions; and



•

penalties imposed by regulatory authorities of the U.S. government, state governments and foreign governments.

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Intellectual Property

    Our intellectual property is an essential element of our business. We rely on a combination of trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand.

    We have a U.S. patent application pending and no issued patents. We do not know whether our patent application will result in the issuance of a patent or whether the examination process will require us to narrow the scope of our claims. To the extent our application proceeds to issuance as a patent, any such future patent may be opposed, contested, circumvented, designed around by a third party or found to be invalid or unenforceable.

    We have entered into a non-exclusive patent license agreement with Subscribermail, LLC and Hula Holdings, LLC. Under the agreement, we have been granted a license to use hierarchical email methodology covered by a patent owned by Hula Holdings and licensed to Subscribermail. Subject to payment of license fees, the duration of our license is equal to the remaining term of the patent.

    Our U.S. registered trademarks include: EXACTTARGET®, EXACTTARGET (& DESIGN)® and Deliverability REPORT CARD®. We focus our trademark efforts in the United States, and when justified by cost and strategic importance we file corresponding foreign trademark applications in certain jurisdictions such as the European Union, Australia, New Zealand, Singapore and the People's Republic of China. Our trademark strategy is designed to provide a balance between the need for coverage in our strategic markets and the need to maintain costs at a reasonable level.

    We also enter into confidentiality and proprietary rights agreements with our employees, consultants and other third parties and control access to software, documentation and other proprietary information.

    We have in the past and may in the future license third party software products to be incorporated into some elements of our services.

Employees

    As of September 30, 2007, we employed a total of 268 employees, substantially all of whom are located in the United States. Our employees are not represented by any labor union, and we have never experienced a work stoppage. We believe we have good relations with our employees.

Facilities

    Our corporate headquarters, including our principal administrative, marketing, technical support and research and development departments, are located in Indianapolis, Indiana, where we lease approximately 52,485 square feet under an agreement that expires in 2013. We believe that our current facilities are suitable and adequate to meet our current needs, and that suitable additional or substitute space will be available as needed to accommodate expansion of our operations.

    See Note 3(b) to the notes to our financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Obligations" for information regarding our lease obligations.

Legal Proceedings

    We are not currently, nor have we been in the past, subject to any material legal proceedings. From time to time, however, we may be named as a defendant in legal actions arising from our normal business activities. These claims, even those that lack merit, could result in the expenditure of significant financial and managerial resources.

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MANAGEMENT

Executive Officers and Directors

    The following table sets forth certain information concerning the persons who serve as our directors and executive officers as of the date of this prospectus. Except as indicated in the following paragraphs, the principal occupations of these persons have not changed during the past five years.

Name	Age	Position with ExactTarget, Inc.
Scott D. Dorsey	40	President and Chief Executive Officer, Director
Traci M. Dolan	50	Chief Financial Officer, Executive Vice President, Finance & Administration, Secretary
Scott J. Bleczinski	42	Executive Vice President, Sales
William K. Boncosky	40	Vice President, General Counsel
Scott S. McCorkle	41	Executive Vice President, Technology & Product
Peter D. McCormick	39	Vice President, Partnerships
Robert A. Compton(1)(2)	51	Chairman of the Board of Directors
Chris Baggott	47	Director
Nikitas Koutoupes(1)(2)	34	Director
Scott M. Maxwell(1)(2)	45	Director

⁽¹⁾

Member of the compensation committee

⁽²⁾

Member of the nominating and corporate governance committee

Scott D. Dorsey co-founded ExactTarget with Chris Baggott and Peter D. McCormick in December 2000 and since that time has served as our President, Chief Executive Officer and as a member of our board of directors. Prior to co-founding ExactTarget, Mr. Dorsey was Chief Sales and Marketing Officer for a Divine, Inc. company, Vice President of Sales for Metro, a division of Steelcase, Inc. and held a variety of sales and marketing roles with Steelcase, Inc. Mr. Dorsey holds a B.S. degree in marketing from Indiana University and an M.B.A. from the Kellogg Graduate School of Management at Northwestern University.

Traci M. Dolan has served as our chief financial officer since February 2004, became Vice President of Finance and Administration in October 2004, our Secretary in January 2007 and was promoted to Executive Vice President in August 2007. From March 2000 to December 2003, Ms. Dolan served as Chief Financial Officer, Vice President of Finance and Administration, Secretary and Treasurer of Made2Manage Systems, Inc., a publicly traded software company. Ms. Dolan also held financial management and operational positions with Macmillan Publishing where she was Vice President of Finance and Operations and with Coopers & Lybrand where she was an audit manager. Ms. Dolan holds a B.S. degree in accounting from Indiana University—Indianapolis.

Scott J. Bleczinski joined ExactTarget in May 2002 and has served as Vice President, Sales since October 2003 and Executive Vice President, Sales since August 2007. Prior to his employment with ExactTarget, Mr. Bleczinski was Vice President of Sales and Marketing for Inforonics Inc. and previously held sales and client relationship roles with Sapient Corporation and Abbott Laboratories. Mr. Bleczinski holds a B.A. in political science from Colgate University.

William K. Boncosky has served as our General Counsel since April 2002. Prior to working for ExactTarget, Mr. Boncosky worked for Qwest Communications International, Inc. as a senior attorney and HPS, Inc. as General Counsel. Mr. Boncosky was also in private practice with Sommer Barnard PC. Mr. Boncosky has a B.S. in Marketing from Indiana University and a J.D. from Indiana University School of Law—Indianapolis.

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Scott S. McCorkle has served as our Executive Vice President, Technology and Product since August 2007 and Vice President, Technology and Product since August 2005. Prior to joining ExactTarget, Mr. McCorkle co-founded Mezzia, Inc., a company that provided on-demand software to manage the planning, budgeting, and execution of capital spending and project-based initiatives. Mr. McCorkle was with Mezzia from December 1999 to July 2005, first as its Vice President of Product and then as President. Mr. McCorkle also held senior management positions with IBM's customer management group and Software Artistry, a company acquired by IBM. Mr. McCorkle holds a B.S. in computer science from Ball State University and an M.B.A from Indiana University.

Peter D. McCormick co-founded ExactTarget in December 2000 and has served as our Vice President, Partnerships since June of 2006. Mr. McCormick held executive positions at ExactTarget with responsibility for services, product development and marketing from inception through June of 2006. Prior to co-founding ExactTarget, Mr. McCormick held sales and channel development leadership positions with Divine, Inc., Target, Inc., and Steelcase, Inc. Mr. McCormick holds a B.S. in finance from the University of Minnesota and an M.B.A. from the Carlson Graduate School of Management at the University of Minnesota.

Robert A. Compton has served as a member of our board of directors and as Chairman since December 2001. He is Chairman of Vontoo, Inc., a privately held software company located in Indianapolis, Indiana that provides permission-based voice messaging solutions. For the past two decades, he has been involved with private equity investments in entrepreneurial ventures primarily related to software, life sciences and education. From 1999 until January 2000, Mr. Compton was President, Neurologic Technologies Division of Medtronic, Inc., a manufacturer of image guided surgery systems, surgical implants and medical devices. From 1997 until 1999, Mr. Compton was President and Chief Operating Officer of Sofamor Danek Group, Inc., a medical device manufacturer, which was acquired by Medtronic, Inc. in January 1999. From 1988 until 1997, Mr. Compton served as a general partner of CID Equity Partners, a venture capital firm. Mr. Compton also serves on the board of directors of Allscript Healthcare Solutions, Inc. (Nasdaq: MDRX), a provider of healthcare software and services. He holds a B.A. degree from Principia College, an M.B.A. from Harvard Business School and an Honorary Doctorate from Rose-Hulman Institute of Technology.

Chris Baggott co-founded ExactTarget and has served as a member of our board of directors since our inception. Mr. Baggott held executive positions responsible for sales and marketing for ExactTarget through the end of 2006 when he founded Conpendium Software, LLC, which provides blogging software. Prior to co-founding ExactTarget, Mr. Baggott was Chief Executive Officer and President of Twyford Group, Marketing Manager for RR Donnelley's catalog business and a sales executive and sales manager for Abbott Labs' Diagnostics Division. Mr. Baggott is a graduate of Evergreen College, Olympia WA. Mr. Baggott is Mr. Dorsey's brother-in-law.

Nikitas Koutoupes has served as a member of our board of directors since July 2004. Since June 2007, Mr. Koutoupes has been a Managing Director of Insight Venture Partners, a private equity and venture capital firm focused on the global software and Internet industries. Mr. Koutoupes joined Insight Venture Partners as a Manager in 2001 and was a Principal of the firm from 2003 to 2007. Prior to joining Insight Venture Partners, Mr. Koutoupes co-founded CTSpace, an on-demand software company and was an Associate with McKinsey & Company, a global management consulting firm. Mr. Koutoupes earned a B.A. with highest honors from Princeton University's Woodrow Wilson School of Public and International Affairs and an M.B.A. with high distinction from Harvard Business School.

Scott M. Maxwell has served as a member of our board of directors since July 2004. Mr. Maxwell is the founder and has been the Senior Managing Director of OpenView Venture Partners, a venture capital fund with a focus on software, the Internet and technology-enabled companies, since 2006. Prior to founding OpenView Venture Partners, Mr. Maxwell served Insight Venture Partners as Chief

70

Operating Officer from 2000 to 2001 and as a Partner and Managing Director from 2000 to 2006. Prior to 2000, Mr. Maxwell had been a Partner and Managing Director, Corporate Development at Putnam Investments, a Senior Vice President, Chief Financial Officer of the Global Equity Division and a member of the Global Equities Executive Committee at Lehman Brothers and a management consultant at McKinsey & Company. Mr. Maxwell has a B.S. and a Master of Science in Mechanical Engineering from University of California, Davis. Mr. Maxwell also graduated from the Massachusetts Institute of Technology, or M.I.T., with a Ph.D. in Mechanical Engineering, and an SM in Management from the M.I.T. Sloan School of Management.

Board Composition

    Our board of directors currently consists of five members, four of whom were elected as directors under board composition provisions of a stockholders' agreement and our certificate of incorporation. The board composition provisions of the stockholders' agreement and our certificate of incorporation will terminate upon the closing of this offering. Upon the termination of these provisions, there will be no further contractual obligations regarding the election of our directors. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal. Other than Mr. Dorsey and Mr. Baggott who are brothers-in-law, there are no family relationships among any of our directors or executive officers.

    In accordance with the terms of our restated certificate of incorporation and amended and restated bylaws that will become effective upon the closing of this offering, our board of directors will be divided into three classes with members of each class of directors serving for staggered three-year terms. The board of directors will consist of Class I directors (currently Mr. Baggott), two Class II directors (currently Mr. Compton and Mr. Koutoupes), and two Class III directors (currently Mr. Dorsey and Mr. Maxwell), whose initial terms will expire at the annual meetings of stockholders held in 2008, 2009 and 2010, respectively. Our classified board could have the effect of making it more difficult for a third party to acquire control of us.

    Robert A. Compton serves as the Chairman of our board of directors.

Director Independence

    Under Rule 4350 of the Nasdaq Marketplace Rules, a majority of a listed company's board of directors must be comprised of independent directors within one year of listing. In addition, Nasdaq Marketplace Rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and nominating and governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended. Under Rule 4200(a)(15) of the Nasdaq Marketplace Rules, a director will only qualify as an "independent director" if, in the opinion of that company's board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered to be independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries; or (2) be an affiliated person of the listed company or any of its subsidiaries.

    In November 2007, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning their background, employment and affiliations, including family relationships, our board of directors has determined that none of Messrs. Compton, Koutoupes and Maxwell, representing three of our five directors, has a

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relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is "independent" as that term is defined under Rule 4200(a)(15) of the Nasdaq Marketplace Rules. Our board of directors also determined that Messrs.                           ,                           and                           who comprise our audit committee and Messrs. Compton, Koutoupes and Maxwell, who comprise our compensation committee and nominating and governance committee, satisfy the independence standards for those committees established by applicable SEC rules and the Nasdaq Marketplace Rules. In making this determination, our board of directors considered the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Board Committees

    Our board of directors has an audit committee, a compensation committee and a nominating and corporate governance committee. Each of these committees will operate under a charter that has been approved by our board of directors to be effective upon completion of this offering. The composition and functioning of all of our committees comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, the Nasdaq Marketplace Rules and SEC rules and regulations.

Audit Committee

    The members of our audit committee are Messrs.                           ,                           and                           . Our board of directors has determined that each of the members of our audit committee satisfies the requirements for financial literacy under the current requirements of the Nasdaq Marketplace Rules. Mr.                           is the chairman of the audit committee and is also an "audit committee financial expert", as defined by SEC rules, and satisfies the financial sophistication requirements of The NASDAQ Global Market.

    The audit committee's responsibilities include, but are not limited to:

•

appointing, compensating, retaining and overseeing our independent registered accounting firm;



•

reviewing the qualifications, performance and independence of the independent registered accounting firm at least annually;



•

consulting with the independent registered accounting firm to assure the rotation of the lead audit partner and the audit partner responsible for reviewing the audit every 5 years;



•

approving in advance the engagement of the independent registered accounting firm for all audit services and permissible non-audit services, subject to any permissible pre-approval procedures;



•

establishing policies for our hiring of employees or former employees of the independent registered accounting firm who participated in the audit of our financial statements;



•

reviewing and discussing with management and the independent registered accounting firm our annual and quarterly financial statements and related disclosures;



•

resolving any disagreements between the independent registered accounting firm and management regarding financial reporting;



•

meeting independently with and having required discussions with the independent registered accounting firm;

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•

preparing the report required by the rules of the Securities and Exchange Commission to be included in our annual proxy statement;



•

overseeing our internal audit function; and



•

reviewing and approving any related-party transactions in accordance with our related party transactions policy, as in effect from time to time.

Compensation Committee

    The members of our compensation committee are Messrs. Compton, Koutoupes and Maxwell. Mr. Koutoupes is the chairman of the committee. The compensation committee's responsibilities include, but are not limited to:

•

annually reviewing and approving goals and objectives relevant to the compensation of our Chief Executive Officer;



•

evaluating the performance of our Chief Executive Officer in light of such compensation goals and objectives and determining the compensation of our Chief Executive Officer;



•

overseeing the compensation of our other executive officers;



•

overseeing and administering our incentive-based compensation programs and equity-based compensation plans and making recommendations with respect to new plans or amendments to existing plans;



•

preparing the compensation committee report required by SEC rules to be included in our proxy statements; and



•

overseeing the compensation of our directors.

Nominating and Corporate Governance Committee

    The members of our nominating and corporate governance committee are Messrs. Compton, Koutoupes and Maxwell. Mr. Maxwell is the chairman of the committee. The nominating and corporate governance committee's responsibilities include, but are not limited to:

•

developing and recommending to the board criteria for board and committee membership;



•

establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders;



•

identifying individuals qualified to become board members;



•

establishing procedures for stockholders to submit recommendations for director candidates;



•

recommending to the board the persons to be nominated for election as directors and to each of the board's committees;



•

developing and recommending to the board a set of corporate governance guidelines; and



•

overseeing the evaluation of the board and management.

Compensation Committee Interlocks and Insider Participation

    None of our executive officers serves, or served during the year ended December 31, 2006, as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who serve as members of our board of directors or our compensation committee. None of the members of our compensation

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committee is an officer or employee of our company, nor have they ever been an officer or employee of our company.

Code of Ethics

    Our board of directors has adopted a code of ethics for our principal executive and senior financial officers. The code applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Upon the effectiveness of the registration statement of which this prospectus forms a part, the full text of our code of ethics will be posted on our website at http://www.exacttarget.com. We intend to disclose future amendments to certain provisions of our code of ethics, or waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions as required by law or regulation. The inclusion of our website address in this prospectus does not include or incorporate by reference the information on our website into this prospectus.

Director Compensation

    Our board of directors did not receive any compensation for their services in 2006 but received reimbursement for reasonable travel and lodging expenses incurred in connection with attending board of directors and committee meetings.

    Our board of directors has adopted a compensation program for non-employee directors, which will become effective on January 1, 2008. The program will provide the following compensation for each non-employee director:

•

an annual cash retainer of $10,000, payable in equal quarterly installments (except for Mr. Compton who has elected not to chair any committees and who will receive an annual retainer of $15,000);



•

a meeting fee of $1,250 for each quarterly board meeting attended in person or by telephone;



•

an annual cash retainer of $7,500 for the chair of the audit committee, and an additional annual cash retainer of $3,750 for other members of the audit committee;



•

an annual cash retainer of $5,000 for the chair of the compensation committee, and an additional annual cash retainer of $2,500 for other members of the compensation committee;



•

an annual cash retainer of $3,000 for the chair of the governance committee, and an additional annual cash retainer of $1,500 for other members of the governance committee, and



•

grants of restricted shares of our common stock with such vesting or other restrictions established by the board prior to any such grants and in the following amounts:



•

at the first regular board meeting after January 1, 2008, we will grant 10,000 shares of restricted stock;



•

we will grant 10,000 shares of restricted stock to newly elected directors upon their election to our board of directors; and



•

we may grant additional shares of restricted stock as determined from time to time by the compensation committee.

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Executive Compensation

Compensation Discussion and Analysis

Overview

    Historically, our board of directors as a whole has implemented and developed our executive compensation programs. We have not adopted any formal guidelines for benchmarking total compensation, and we have not retained any compensation consultants to review our policies and procedures related to executive compensation. Although we had previously appointed a compensation committee, its functions were performed by the board of directors. We have appointed a new compensation committee in connection with the offering which will begin to function on January 1, 2008.

    Over the past year, we have begun to formalize our approach to the development of our executive compensation programs. In establishing executive compensation levels for 2007, we reviewed salary reports and benchmark data provided by Culpepper and Associates, Inc. Culpepper is a paid provider of compensation and benefits benchmarking data for technology companies. The data is available on-line and allows subscribers to benchmark their compensation levels against those of companies of similar revenue size, number of employees, geographic location and industry. The Culpepper report sorted the results based on geography (the Midwest, excluding Chicago and Minneapolis), size of the company (using only those companies with annual revenues between $20.0 million and $60.0 million or with an employee head count of 250 or more, or both), and sector (software).

    We also developed a peer group of public software and technology companies, including one public software company located in Indianapolis, Indiana for a local comparison. The peer group information provided us a basis for evaluating the competitiveness of our base pay and cash bonuses based on information provided in the peer group companies' 2006 annual proxy statements. We chose the companies in the peer group because of their industry, business model, and comparable size and, in the case of Interactive Intelligence, because it also has its headquarters in Indianapolis, Indiana. For fiscal 2007, our selected public company peer group consisted of Interactive Intelligence, Inc., RightNow Technologies, Vocus, Inc. and WebSideStory, Inc. (now operating as Visual Sciences, Inc.).

    In the future, our compensation committee will annually evaluate past performance, competitor performance and general market conditions to establish individual and corporate performance targets. We will continue to consider publicly available data relating to the compensation practices and policies of other companies within and outside our industry. Our compensation committee will also receive and take into account specific recommendations from our Chief Executive Officer in making compensation decisions for executives other than our Chief Executive Officer. Our compensation committee will also have the authority to engage an independent compensation consulting firm to provide advice as it deems appropriate.

Objectives and Philosophy of Our Executive Compensation Programs

    We strive to use our compensation program for executive officers to attract and retain superior executives and to align their interests with those of our stockholders. As a general matter, we do not believe that our executive officers should receive fringe benefits or perquisites that are not available to other employees. We believe that the primary components of each executive officer's compensation should be a competitive base salary and incentive compensation that rewards the achievement of short-term objectives (quarterly or annual) as well as longer term performance goals. We also believe that the allocation between base salary and incentive cash compensation should reflect the allocation of the peer group. We seek to establish base compensation and incentive cash

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compensation opportunities for each executive employee at or above the midpoint for comparable executives in the Culpepper report and consistent with those provided by our public company peers for comparable executives. We also believe that stock ownership is important because it aligns our executive officers' interests with those of our stockholders. Thus, we anticipate that equity compensation will continue to represent a significant element of each executive officer's potential compensation. Finally, we believe that, to ensure that our executive officers act in the best interests of stockholders without considering their future employment security, it is important to provide a meaningful severance benefit upon certain terminations of employment after a change of control.

Role of Executive Officers in Compensation Decisions

    After completion of the offering, the committee, rather than the full board, will determine each element of compensation for each of our executive officers. We anticipate that our Chief Executive Officer will review the compensation and performance of each executive officer other than himself annually and make recommendations to the committee regarding such officer's compensation (and each element of compensation) for the following year. We also anticipate that the Chairman of the committee will review the compensation and performance of the Chief Executive Officer and make recommendations to the committee regarding the Chief Executive Officer's compensation (and each element of compensation) for the following year.

Committee Procedures

    In past years, the full board has served the functions of the committee. In doing so, the board did not operate under formal procedures. As the committee begins to operate, we expect to develop formal procedures, including a more formalized peer group for comparing compensation. We also anticipate that the committee will review each element of each executive officer's compensation annually in light of the executive officer's performance, our performance as a company and market factors. In making these evaluations, the committee will use the services of independent compensation consultants to the extent needed, but to date the committee has not retained a consultant. In evaluating appropriate levels of compensation for executive officers, the committee intends to establish levels of base compensation and overall cash compensation opportunities that are consistent with the objectives and benchmarks described under "Executive Compensation—Objectives and Philosophy of our Executive Compensation Programs."

Components of Our Executive Compensation Program

    Our executive officers' compensation currently consists of three primary components: base salary, annual cash incentive and stock option awards under our stock option plan. As a co-founder, Mr. Dorsey has a substantial equity interest and thus has not been awarded options. In addition, we provide our executive officers with a variety of benefits that are available to all salaried employees. We do not have any formal or informal policy or target for allocating compensation between long-term and short-term compensation, although we try to achieve an allocation that is consistent with the allocation for comparable executive officer positions within the peer group. Instead, we have determined on a case-by-case basis the appropriate level and mix of the various compensation components. We have identified the level of cash compensation needed to attract and retain professionals and, to the extent that compensation was below market based upon the data available from Culpepper and other data sources, we have made appropriate compensation adjustments.

Base Salaries

    Annually, we review base salaries and other components of each named executive officer's compensation based on an assessment of the executive officer's performance, our overall performance, peer group executive officer compensation, and general compensation trends in our

76

industry. For each executive officer, we have tried to establish both base salary and incentive compensation at or above the midpoint for comparable executives in the Culpepper report and consistent with those provided by our public company peers for comparable executives.

    Based on the factors described above, in 2007, we increased the base salaries of our named executive officers for 2007 as follows: Mr. Dorsey's annual base salary increased from $175,000 in 2006 to $250,000 in 2007; Ms. Dolan's annual base salary increased from $150,000 in 2006 to $175,000 in 2007; Mr. McCorkle's annual base salary increased from $150,000 in 2006 to $200,000 in 2007; and Mr. Bleczinski's annual base salary increased from $150,000 in 2006 to $175,000 in 2007. Given Mr. McCormick's responsibilities established in 2006, his 2007 annual base salary remained at $175,000.

Cash Incentive Bonuses

    Each of the named executive officers participates in an incentive cash bonus program. The program terms for 2006 were identical for Messrs. Dorsey, McCorkle and McCormick and Ms. Dolan, while Mr. Bleczinski participated in a modified program which we considered more appropriate for his position as Vice President, Sales.

    The quarterly cash bonuses earned under the program were payable at the end of the month following the close of the applicable quarter. Because we believe that our annual cash incentive compensation should motivate our executives to achieve performance that benefits our stockholders, we generally set performance goals at a level that would require a high level of execution and achievement by our executives. These performance goals are based on the achievement of our business plan goals, which are designed to be aggressive but achievable.

    For 2006, we paid cash incentive bonuses to Messrs. Dorsey, McCorkle and McCormick and Ms. Dolan based upon the achievement of new bookings, total bookings and operating income targets. In each case, the maximum possible bonus for the year was $22,500, and each earned a bonus of $20,000. The first quarter maximum potential bonus of $5,000 was based 50% upon achieving a new bookings target and 50% upon achieving a total bookings target for the quarter. The second and third quarter maximum potential bonus of $5,000 per quarter was based 50% on achieving a total bookings target and 50% upon achieving an operating income target. The fourth quarter maximum potential bonus of $7,500 was based one-third upon achieving a new bookings target for the quarter, one-third upon achieving a total bookings target for the quarter and one-third upon achieving an operating income target for the quarter.

    For purposes of the bonus program, bookings are defined as the annual subscription contract value, incremental messaging fees and additional commitments by existing clients. "New bookings" means bookings with organizations that have not been a client during the preceding 12 months. "Total bookings" means all bookings from new and existing clients. For multi-year contracts, bookings for bonus purposes are limited to bookings attributable to the next 12 months.

    For 2006, Mr. Bleczinski had a bonus opportunity of $10,000 based upon the achievement of first quarter performance targets, and $20,000 based on the achievement of performance targets for each of the first six months, second six months and full year. By significantly exceeding performance targets, Mr. Bleczinski earned a 2006 bonus of $139,350. For the first quarter, Mr. Bleczinski's performance criteria were based on new bookings and total bookings, weighted equally. For the first six months, second six months and full year, performance criteria were based on new bookings and the expenses subject to Mr. Bleczinski's control. The amount of the bonus was determined according to a grid based on the relationship of new bookings and controllable expenses to the business plan. If controllable expenses exceeded 110% of the plan, or new bookings were less than 90% of the plan, no bonus was payable for the period. The bonus amount under the grid, if

77

positive, was increased further by the percentage by which total bookings for the period exceeded the bookings set forth in the business plan.

Equity Incentive Compensation

    We believe that equity ownership by our executive officers and other employees helps establish a positive ownership culture throughout our company and aligns our executive officers' interests with those of our stockholders. Currently, we offer equity incentive compensation only through the award of non-qualified stock options under our stock option plan. In general, we grant options only when an employee is first hired or promoted to a position involving more substantial duties and compensation. However, on a case-by-case basis, we grant additional equity incentive compensation to award extraordinary performance or to provide additional incentive. During 2006, we granted Mr. Bleczinski an option to purchase 20,000 shares at an exercise price of $4.00 per share. During 2007, we granted Mr. McCorkle an option to purchase 100,000 shares at an exercise price of $5.52 per share.

    We have historically granted stock options at exercise prices equivalent to the fair value of our common stock as of the date of grant. Prior to June 30, 2007, our board of directors had estimated the fair value of our common stock on a quarterly basis with input from management. Because there has been no public market for our common stock, our board of directors determined the fair value of our common stock by considering a number of objective and subjective factors including peer group trading multiples, the amount of preferred stock liquidation preferences, our historical financial performance and financial position, the illiquid nature of our common stock and future prospects for liquidity events and sale and offer prices of preferred stock in private transactions negotiated at arm's length. We believe our estimates of the fair value of our common stock were reasonable.

    In 2007, our board of directors obtained an independent valuation to determine the fair value of our common stock as of June 30, 2007. Our board of directors also obtained an independent valuation update as of September 30, 2007 and intends to conduct periodic updates to support the exercise price of any additional stock option grants before completion of this offering.

    Other than restricted stock grants for non-employee directors, we do not have any program, plan or obligation that requires us to grant equity compensation on specified dates and, because we have not been a public company, we have not made equity grants in connection with the release or withholding of material non-public information. Authority to make equity grants to executive officers currently resides in our board of directors but will reside in our compensation committee commencing January 1, 2008. In the future, we expect the exercise price of options to be set at the closing price of our common stock on the date of grant.

    Through our option plan, we encourage our executive officers to acquire equity interests in our Company. However, we do not have specific share retention and ownership guidelines for our executive officers. After we become a publicly traded company following this offering, we will not permit our executive officers, directors or other members of management to engage in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to our stock.

Deductibility Cap on Executive Compensation

    Under Internal Revenue Code Section 162(m), subject to an exception for qualifying performance-based compensation, after we become a public company, we cannot deduct over $1.0 million in annual compensation paid to certain executive officers. Given the levels of compensation we pay to our employees, this limitation should not have any impact on us for the foreseeable future. In addition, we intend to structure our equity incentive program so that stock options and other equity-based grants qualify as performance-based compensation for purposes of Section 162(m).

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2006 Summary Compensation Table

    The following table sets forth information regarding compensation earned by our Chief Executive Officer, our Chief Financial Officer, Executive Vice President, Finance and Administration, and each of our three other most highly compensated executive officers during the year ended December 31, 2006. We refer to these executive officers as our "named executive officers" elsewhere in this prospectus.

Name and Principal Position	Salary ($)		Option Awards ($)			Non-Equity Incentive Plan Compensation ($)(1)(2)		All Other Compensation ($)			Total ($)
Scott D. Dorsey, President, Chief Executive Officer	$	175,000	$	—		$	20,000	$	—		$	195,000
Traci M. Dolan, Chief Financial Officer, Executive Vice President, Finance and Administration, Secretary		150,000		—			20,000		—			170,000
Scott J. Bleczinski, Executive Vice President, Sales		150,000		6,116	(3)		139,350		15,583	(4)		311,049
Scott S. McCorkle, Executive Vice President, Technology & Product		150,000		—			20,000		—			170,000
Peter D. McCormick, Vice President, Partnerships		175,000		—			20,000		—			195,000

⁽¹⁾

No earnings accrue under our non-equity incentive compensation plan.

⁽²⁾

The amounts shown were paid in 2006 and in the first quarter of 2007 to each of the named executive officers.

⁽³⁾

The amount reflected is the compensation cost that we recognized in 2006 under Statement of Financial Accounting Standard No. 123-R (Share-Based Payments). The amount reflected consists entirely of a non-qualified stock option granted in 2006. We determined the fair value of the grant as of the grant date using the Black-Scholes option pricing method with the assumptions described under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock Based Compensation."

⁽⁴⁾

Includes housing allowance of $15,439 and life insurance premium of $144.

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2006 Grants of Plan-Based Awards

    The following table sets forth information regarding grants of awards made to our named executive officers during the year ended December 31, 2006.

Name	Grant Date	Estimated Future Payouts Under Non-Equity Incentive Plan Awards Target ($)			Estimated Future Payouts Under Equity Incentive Plan Awards (#)	Exercise or Base Price of Option Awards ($/Sh)			Grant Date Fair Value of Stock and Option Awards ($)
Scott D. Dorsey	—	$	22,500	(1)	—	$	—		$	—
Traci M. Dolan	—		22,500	(1)	—		—			—
Scott J. Bleczinski	4/1/2006		70,000	(2)	20,000		4.00	(3)		32,469
Scott S. McCorkle	—		22,500	(1)	—		—			—
Peter D. McCormick	—		22,500	(1)	—		—			—

⁽¹⁾

We established two performance criteria for each of the first three quarters of the year and three performance criteria for the fourth quarter of the year. For the first three quarters, each of the criteria related to one half of the potential bonus, and for the fourth quarter, each of the criteria related to one third of the potential bonus. For a discussion of the performance criteria, see "Executive Compensation—Cash Incentive Bonuses". These executive officers were not eligible to increase their bonus compensation beyond the targeted amount by exceeding all performance criteria. Based on performance, the award for each individual was $20,000, which was paid in 2006 and the first quarter of 2007.

⁽²⁾

Mr. Bleczinski had target bonus opportunities of $10,000 based on first quarter performance, and $20,000 each based on first half performance, second half performance, and full year performance. Under the program, Mr. Bleczinski was eligible to increase his bonus beyond the targeted amount by exceeding targeted performance goals. For a discussion of the performance criteria and possible bonus amounts, see "Executive Compensation—Cash Incentive Bonuses." Based on exceptional performance, the award for Mr. Bleczinski was $139,350, which was paid in 2006 and the first quarter of 2007.

⁽³⁾

We have historically granted stock options at exercise prices equivalent to the fair value of our common stock as of the date of grant. Prior to June 30, 2007, our board of directors had estimated the fair value of our common stock on a quarterly basis with input from management. Because there has been no public market for our common stock, our board of directors determined the fair value of our common stock by considering a number of objective and subjective factors including peer group trading multiples, the amount of preferred stock liquidation preferences, our historical financial performance and financial position, the illiquid nature of our common stock and future prospects for liquidity events and sale and offer prices of preferred stock in private transactions negotiated at arm's length.

    In 2007, we granted to Mr. McCorkle an option to purchase 100,000 shares at an exercise price of $5.52 per share. The option granted to Mr. McCorkle in 2007 is a non-qualified stock option that will vest over a four year period with 25% vested after one year and thereafter at the rate of ¹/48 per month for 36 months. In the event of a change in control (as defined in the option agreement), additional shares vest equal to an additional 12 months of vesting (that is, an additional ¹²/48 of the shares will be deemed to have vested).

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2006 Outstanding Equity Awards at Fiscal Year End

    The following table sets forth information regarding outstanding option awards held by our named executive officers at December 31, 2006.

	Option Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date
Scott D. Dorsey	—	—		$	—	—
Traci M. Dolan	7,500 102,917	2,500 87,083	(1) (2)		0.42 1.00	2/1/2014 10/1/2014
Scott J. Bleczinski	60,000 60,000 300,000 —	— — — 20,000	(3)		0.30 0.42 0.42 4.00	5/9/2012 4/1/2013 10/1/2013 4/1/2016
Scott S. McCorkle	66,666	133,334	(4)		2.50	8/15/2015
Peter D. McCormick	—	50,000	(5)		0.42	4/1/2013

⁽¹⁾

These securities relate to an option to purchase 10,000 shares. The option became vested with respect to 25% of the shares on May 1, 2004 and vest with respect to an additional 25% on February 1, 2005, 2006 and 2007.

⁽²⁾

These securities relate to an option to purchase 190,000 shares. The option became vested with respect to 25% of the shares on October 1, 2005 and vest with respect to an additional ¹/48th of the shares in each of the following 36 months.

⁽³⁾

These securities relate to an option to purchase 20,000 shares. The option became vested with respect to 25% of the shares on April 1, 2007 and vest with respect to an additional ¹/48th of the shares in each of the following 36 months.

⁽⁴⁾

These securities relate to an option to purchase 200,000 shares. The option became vested with respect to 25% of the shares on August 15, 2006 and vest with respect to an additional ¹/48th of the shares in each of the following 36 months.

⁽⁵⁾

These securities relate to an option to purchase 200,000 shares. The option became vested with respect to 25% of the shares on April 1, 2004 and vest with respect to an additional 25% per year of the shares on April 1, 2005, 2006 and 2007. Mr. McCormick has exercised the option with respect to 150,000 of the shares.

2006 Option Exercises and Stock Vested

    The following table sets forth information regarding options exercised by our named executive officers during the year ended December 31, 2006.

	Option Awards
Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)(1)
Scott D. Dorsey	—	$	—
Traci M. Dolan	—		—
Scott J. Bleczinski	—		—
Scott S. McCorkle	—		—
Peter D. McCormick	150,000		532,035

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    We have historically granted stock options at exercise prices equivalent to the fair value of our common stock as of the date of grant. Prior to June 30, 2007, our board of directors had estimated the fair value of our common stock on a quarterly basis with input from management. Because there has been no public market for our common stock, our board of directors determined the fair value of our common stock by considering a number of objective and subjective factors including peer group trading multiples, the amount of preferred stock liquidation preferences, our historical financial performance and financial position, the illiquid nature of our common stock and future prospects for liquidity events and sale and offer prices of preferred stock in private transactions negotiated at arm's length.

Employment Agreements

    We have entered into employment agreements with each of our named executive officers which were amended and restated in connection with the offering and which we anticipate will remain in effect after the completion of the offering. Each employment agreement contains the following terms:

•

annual base salary to be determined by the compensation committee;



•

participation in the executive bonus program and benefits plans generally available to other employees;



•

a non-change of control severance payment equal to six months' base salary, or 12 months' base salary in the case of Mr. Dorsey, if we terminate the executive officer's employment for reasons other than unacceptable performance, as defined in the employment agreement, or the executive officer terminates his or her employment for adequate reason, as defined in the employment agreement. The non-change of control severance benefit is payable as a lump sum within 30 days after termination of employment, unless a delay is required by Section 409A of the Internal Revenue Code.



•

a change in control severance benefit equal to the sum of 100% or, in the case of Mr. Dorsey, 150%, of the executive officer's annual base salary at the rate then in effect plus 50% of his or her annual bonus for the year immediately preceding the year in which the change of control occurs, if we terminate the executive officer's employment upon or within 12 months after a change of control without cause or the executive officer terminates his or her employment within 12 months after a change of control with good reason. Any change of control payment would be made in a lump sum within 30 days after termination of employment, unless a delay is required by Section 409A of the Internal Revenue Code; and



•

confidentiality, non-competition and non-disparagement obligations. The confidentiality and non-disparagement provisions continue indefinitely, and the non-competition provisions expire 12 months after termination of the executive officer's employment.

    The change of control provisions described above were chosen because they are consistent with terms granted to executives of similarly situated companies. For purposes of the change of control provisions of each named executive officer's employment agreement, the following terms have the meanings described below:

•

Adequate reason means our material breach of the employment agreement, material reduction of the executive officer's compensation, or requirement that the executive officer regularly perform the services of his or her employment more than 40 miles from our home office (in the case of an executive officer whose office is in our headquarters);



•

Change of control means a merger, consolidation, reorganization or similar business transaction, unless immediately after such transaction, more than 50% of the outstanding voting power of the surviving or resulting entity is held by persons who were our stockholders

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immediately before the transaction; or our consummation of a sale of all or substantially all of our assets;

•

Cause means any of the following that has caused us substantial and material injury: the executive officer's act or omission constituting fraud, conviction of (or entry of a plea of nolo contendere with respect to) a felony, intentional disclosure of confidential information, or (iv) material neglect of duty or serious misconduct;



•

Good reason means our material breach of the employment agreement; material reduction in the executive officer's base compensation; requirement that the executive officer regularly perform the duties on his or her employment at a location more than 40 miles from our current headquarters (in the case of an executive officer whose office is in our headquarters), or material diminution in the executive officer's responsibilities, position or job title to which he or she has not agreed in writing; and



•

Unacceptable performance means the executive officer's act or omission constituting cause, willful and material failure to perform the duties of his or her employment, provided that the executive does not correct such failure within five days after receiving written notice thereof; willful and material violation of our code of ethics or harassment policies; or intentional material breach of the employment agreement, provided that the executive does not cure the breach within five days after receiving written notice thereof.

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Potential Payments Upon Termination or Change of Control

    The following table describes the potential payments and benefits upon termination of our named executive officers' employment before or after a change of control, as if each officer's employment had terminated on December 31, 2006.

Name	Benefit	Resignation with Good Reason or Termination without Good Cause prior to Change of Control		Resignation with Good Reason or Termination without Good Cause after Change of Control		Acceleration of Vesting upon a Change of Control
Scott D. Dorsey	Severance Vacation Payout Accelerated Options(1) Total Value	$	175,000 3,365 — 178,365	$	269,267 3,365 — 272,632	$	— — — —
Peter D. McCormick	Severance Vacation Payout Accelerated Options Total Value	$	87,500 3,365 — 90,865	$	181,267 3,365 — 184,631	$	— — 178,845 178,845	(2)
Traci M. Dolan	Severance Vacation Payout Accelerated Options Total Value	$	75,000 2,885 — 77,885	$	156,767 2,885 — 159,652	$	— — 270,191 270,191	(3)
Scott S. McCorkle	Severance Vacation Payout Accelerated Options Total Value	$	75,000 2,885 — 77,885	$	150,850 2,885 — 153,735	$	— — 75,000 75,000	(4)
Scott J. Bleczinski	Severance Vacation Payout Accelerated Options Total Value	$	75,000 1,731 — 76,731	$	169,895 1,731 — 171,626	$	— — — —

⁽¹⁾

We have historically granted stock options at exercise prices equivalent to the fair value of our common stock as of the date of grant. Prior to June 30, 2007, our board of directors had estimated the fair value of our common stock on a quarterly basis with input from management. Because there has been no public market for our common stock, our board of directors determined the fair value of our common stock by considering a number of objective and subjective factors including peer group trading multiples, the amount of preferred stock liquidation preferences, our historical financial performance and financial position, the illiquid nature of our common stock and future prospects for liquidity events and sale and offer prices of preferred stock in private transactions negotiated at arm's length.

⁽²⁾

The amount reported is equal to the spread between the $0.4231 per share exercise price for 50,000 shares subject to accelerated vesting and the $4.00 per share fair value of the stock as of December 31, 2006.

⁽³⁾

The amount reported is equal to the sum of the spread between the $0.4231 per share exercise price for 2,500 shares subject to accelerated vesting and the $4.00 per share fair value of the stock as of December 31, 2006, plus the spread between the $1.00 per share exercise price for 87,083 shares subject to accelerated vesting and the $4.00 per share fair value of the stock as of December 31, 2006.

⁽⁴⁾

The amount reported is the spread between the $2.50 per share exercise price for 50,000 shares subject to accelerated vesting and the $4.00 per share fair value of the stock on December 31, 2006.

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Employee Benefit Plans

ExactTarget, Inc. 2004 Stock Option Plan, as amended

    Our 2004 Stock Option Plan, as amended, which we refer to as the 2004 plan was approved by our stockholders and board of directors. A maximum of 4,807,624 shares of common stock are authorized for issuance under the 2004 plan.

    The 2004 plan provides for the grant of incentive stock options and non-statutory stock options. Our employees, officers and directors, and any subsidiary corporation's employees, officers and directors, are eligible to receive awards under the 2004 plan; however, incentive stock options may only be granted to our employees or any subsidiary corporation's employees.

    In accordance with the terms of the 2004 plan, our board of directors, or a compensation committee thereof, administers the 2004 plan. Subject to any limitations in the 2004 plan, the administrator has the power to determine the terms of the awards, including the employees and directors who will receive awards, the exercise price, the number of shares subject to each award, the vesting schedule and exercisability of awards and the form of consideration payable upon exercise.

    Most stock options granted under the 2004 plan vest over a four year period with 25% vested after one year and thereafter at the rate of ¹/48 per month. In the event of a change in control (as defined in individual option agreements), additional options may vest equal in most cases to an additional 12 months of vesting (that is, an additional ¹²/48 of the options shall be deemed to have vested).

    With respect to all incentive stock options granted under the 2004 plan, the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an option may not exceed 10 years, except that with respect to any participant who owns 10% of the voting power of all classes of our outstanding stock as of the grant date, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the grant date. The administrator determines the terms of all other options.

    After termination of an employee or director, he or she may exercise his or her option for the period of time stated in the option agreement unless such termination is for Cause (as defined in the 2004 plan), in which case all of the outstanding stock options as of the date of termination shall be forfeited immediately. If termination is due to disability, death or retirement, the option will remain exercisable for no less than three months. In all other cases, other than a termination for Cause, the option will generally remain exercisable for at least one month. However, an option generally may not be exercised later than the expiration of its term.

    Unless otherwise determined by the administrator, the 2004 plan generally does not allow for the sale or transfer of option awards under the 2004 plan other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the participant only by such participant.

    Our board of directors has the authority to amend, alter, suspend or terminate the 2004 plan provided such action does not impair the rights of any participant without the written consent of such participant.

    Our 2004 plan provides that in the event of the proposed dissolution or liquidation of the company, or in the event of a proposed sale of substantially all of the assets of the company, each stock option shall terminate as of a date fixed by the board of directors, provided that no fewer than 30 days written notice of the date so fixed shall be given to each holder of stock options and each holder of stock options shall have the right during the period of 30 days preceding such termination to exercise his or her stock options as to all or any part of the shares of common stock covered thereby.

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    As of September 30, 2007, there were options to purchase 3,274,016 shares of common stock outstanding under the 2004 plan at a weighted average exercise price of $1.75, and 50,403 shares of common stock were issued during 2007 pursuant to the exercise of options granted under the 2004 plan.

Limitation on Officers' and Directors' Liability and Indemnification Agreements

    As permitted by Delaware law, our restated certificate of incorporation and amended and restated bylaws, both of which will become effective upon the closing of this offering, contain provisions that limit or eliminate the personal liability of our directors for breach of fiduciary duty of care as a director. Our restated certificate of incorporation and amended and restated bylaws limit the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that directors of a corporation will not be personally liable for monetary damages for breaches of their fiduciary duties as directors, except liability for:

•

any breach of the director's duty of loyalty to us or our stockholders;



•

any act or omission not in good faith or that involves intentional misconduct or knowing violation of law;



•

any unlawful payments related to dividends, unlawful stock repurchases, redemptions or other distributions; or



•

any transaction from which the director derived an improper personal benefit.

    These limitations do not apply to liabilities arising under federal securities laws and do not affect the availability of equitable remedies, including injunctive relief or rescission. If Delaware law is amended to authorize the further elimination or limitation of liability of a director, then the liability of our directors will be eliminated or limited to the fullest extent permitted by Delaware law as so amended.

    As permitted by Delaware law, our restated certificate of incorporation and amended and restated bylaws also provide that:

•

we will indemnify our directors and officers to the fullest extent permitted by law;



•

we may indemnify our other employees and other agents to the same extent that we indemnify our officers and directors, unless otherwise determined by our board of directors; and



•

we will advance expenses to our directors and officers in connection with a legal proceeding to the fullest extent permitted by law.

    The indemnification provisions contained in our restated certificate of incorporation and amended and restated bylaws are not exclusive. We have entered into agreements to indemnify Messrs. Baggott, Compton, Dorsey, Koutoupes and Maxwell, each of whom is a current member of our board of directors. We also intend to obtain, contemporaneously with the offering, insurance which covers certain liabilities arising out of claims based on acts or omissions in their capacities of officers and directors, including liabilities under the Securities Act of 1933. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and officers.

    Insofar as indemnification for liabilities arising under the Securities Act may be permitted for directors, officers or persons controlling our company pursuant to the foregoing provisions, the opinion of the SEC is that such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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PRINCIPAL AND SELLING STOCKHOLDERS

    The following table sets forth information regarding the beneficial ownership of our common stock as of September 30, 2007 and as adjusted to reflect the sale of common stock offered by us and the selling stockholders in this offering, for:

•

each of our directors;



•

each of our named executive officers;



•

each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our common stock;



•

all of our directors and executive officers as a group; and



•

each selling stockholder.

    Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock issuable upon the exercise of stock options that are immediately exercisable or exercisable within 60 days. Except as otherwise indicated in the footnotes to the table below, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose.

    Percentage ownership calculations for beneficial ownership prior to this offering are based on 18,655,122 shares outstanding as of September 30, 2007, assuming the conversion of all of our outstanding preferred stock and shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days. Percentage ownership calculations for beneficial ownership after this offering also include the shares we are offering hereby. We and the selling stockholders have granted to the underwriters the option to purchase up to an additional             shares of common stock at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments, if any. Information in the following table assumes that the underwriters do not exercise their over-allotment option.

    Beneficial ownership representing less than 1% is denoted with an asterisk (*). Except as otherwise indicated in the footnotes to the table below, addresses of named beneficial owners are in care of ExactTarget, Inc., 20 North Meridian Street, Indianapolis, Indiana 46204.

		Shares Beneficially Owned Prior to Offering					Shares Beneficially Owned After Offering
Name of Beneficial Owner						Shares Offered
		Number		Percentage			Number	Percentage
5% Stockholders
Entities affiliated with Insight Venture Partners(1)		6,569,833		35	%
Entities affiliated with Montagu Newhall Global Partners(2)		1,740,000		9
Directors and Named Executive Officers
	Nikitas Koutoupes(3)	—		*
	Scott M. Maxwell	—		*
	Robert A. Compton	1,900,000	†	10
	Scott D. Dorsey	1,500,000		8
	Chris Baggott	1,350,760		7
	Peter D. McCormick(4)	737,313		4
	Scott J. Bleczinski(5)	427,917		2
	Traci M. Dolan(6)	156,458		*
	Scott S. McCorkle(7)	138,687	†	*
All executive officers and directors as a group (9 persons)		12,780,968		69

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Other selling stockholders:

†

Excludes shares of common stock issuable upon conversion of unpaid dividends on our Series A and Series B preferred stock ($261,000 and $104,000, respectively) at the initial public offering price.

⁽¹⁾

Consists of 5,194,051 shares held by Insight Venture Partners IV, L.P., 694,402 shares held by Insight Venture Partners (Cayman) IV, L.P., 640,108 shares held by Insight Venture Partners IV (Co-Investors), L.P. and 41,272 shares held by Insight Venture Partners IV (Fund B), L.P. Insight Venture Associates IV, L.L.C. is the general partner of each of the Insight entities (collectively, the "Insight Partnerships"). The managing member of Insight Venture Associates IV, L.L.C. is Insight Holdings Group, L.L.C. Insight Holdings Group, L.L.C. is managed by its board of managers. Insight Venture Associates IV, L.L.C. and Insight Holdings Group, L.L.C. have voting and investment power with respect to the shares held by the Insight Partnerships. The members of Insight Venture Associates IV, L.L.C. include Nikitas Koutoupes and Scott Maxwell, members of our board of directors. The address of the entities affiliated with Insight Venture Partners is 680 Fifth Avenue, New York, New York, 10019.

⁽²⁾

Consists of 516,762 shares held by Montagu Newhall Global Partners II, L.P., 12,725 shares held by Montagu Newhall Global Partners II-A, L.P., 123,013 shares held by Montagu Newhall Global Partners II-B, L.P., 374,300 shares held by Montagu Newhall Global Partners III, L.P., 171,671 shares held by Montagu Newhall Global Partners III-A, L.P. and 541,529 shares held by Montagu Newhall Global Partners III-B, L.P. Montagu Newhall General Partner II, L.L.C. is the general partner of Montagu Newhall General Partner II, L.P. and Montagu Newhall General Partner II, L.P. is the general partner of Montagu Newhall Global Partners II, L.P., Montagu Newhall Global Partners II-A, L.P. and Montagu Newhall Global Partners II-B, L.P. Montagu Newhall General Partner III, L.L.C. is the general partner of Montagu Newhall General Partner III, L.P. and Montagu Newhall General Partner III, L.P. is the general partner of Montagu Newhall Global Partners III, L.P., Montagu Newhall Global Partners III-A, L.P., and Montagu Newhall Global Partners III-B, L.P. James Lim, Ashton Newhall, Kevin Campbell and Rupert Montagu are the managing members of Montagu Newhall General Partner II, L.L.C. and Montagu Newhall General Partner III, L.L.C. and share such powers. Montagu Newhall General Partner II, L.L.C. and Montagu Newhall General Partner III, L.L.C. has the sole voting and investment power over the shares owned by each Montagu Newhall Global Partners affiliate noted above, although each of them disclaims beneficial ownership of such shares, except to the extent of his pecuniary interest therein. The address of the entities affiliated with Montagu Newhall Partners is 100 Painters Mill Road, Owings Mills, MD 21117.

⁽³⁾

Mr. Koutoupes holds no voting or investment power over the shares owned by the Insight Partnerships.

⁽⁴⁾

Includes 50,000 shares subject to options exercisable within 60 days of September 30, 2007.

⁽⁵⁾

Includes 427,917 shares subject to options exercisable within 60 days of September 30, 2007.

⁽⁶⁾

Includes 156,458 shares subject to options exercisable within 60 days of September 30, 2007.

⁽⁷⁾

Includes 112,500 shares subject to options exercisable within 60 days of September 30, 2007.

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CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

    Since January 1, 2004, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are a party in which the amount involved exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than the transactions described below.

Series C and D Financings

    In July 2004, we issued an aggregate of 5,865,922 shares of our Series C preferred stock to entities affiliated with Insight Venture Partners at a price of $1.79 per share and an aggregate purchase price of $10.5 million. Upon the closing of this offering, these shares will automatically convert into 5,865,922 shares of common stock. As of September 30, 2007, accrued dividends of $1,260,000 would convert into 703,910 additional shares of common stock.

    In November 2006 and January 2007, we issued and sold an aggregate of 1,740,000 shares of our Series D preferred stock to entities affiliated with Montagu Newhall Global Partners for $4.00 per share and an aggregate purchase price of $7.0 million. Upon the closing of this offering, these shares will automatically convert into the same number of shares of common stock. With the proceeds from the sale of our Series D preferred stock, we repurchased shares of our common stock, Series A preferred stock and Series B preferred stock from several stockholders. Messrs. Baggott, Compton, Dorsey and McCormick participated in these share repurchases and received $2.6 million, $400,000, $2.0 million and $1.3 million, respectively, and all other holders of our common stock and Series A and Series B preferred stock also had the right to participate on a pro rata basis.

Amended and Restated Stockholders' Agreement

    In November 2006, in connection with the sale of our Series D preferred stock, we entered into an amended and restated stockholders' agreement with the holders of our preferred stock and common stock, including the entities affiliated with Insight Venture Partners and Montagu Newhall Global Partners. The agreement sets forth agreements to appoint directors to our board, rights of first refusal and co-sale, preemptive rights and drag-along rights, among other requirements. The amended and restated stockholders' agreement terminates upon the closing of this offering.

Amended and Restated Registration Rights Agreement

    In connection with the sale of our Series D preferred stock, we entered into an amended and restated registration rights agreement, dated as of November 8, 2006, with the holders of shares of our common stock issuable upon conversion of the shares of preferred stock, including shares of preferred stock held by some of our directors, the entities affiliated with Insight Venture Partners and the entities affiliated with Montagu Newhall Global Partners. For further information regarding the registration rights agreement, see "Description of Capital Stock—Registration Rights."

Indemnification Agreements

    We have entered into agreements to indemnify Messrs. Baggott, Compton, Dorsey, Koutoupes and Maxwell, each of whom is a member of our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. For more information regarding indemnification matters, see "Management—Indemnification of Officer and Directors' Liability and Indemnification Agreements."

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Policies and Procedures for Related Party Transactions

    We have a written policy that our executive officers, directors, and principal stockholders, including their immediate family members and affiliates, are not permitted to enter into a related party transaction with us without the prior consent of our audit committee, or other independent members of our board of directors in the case it is inappropriate for our audit committee to review such transaction due to a conflict of interest. Any request for us to enter into a transaction with an executive officer, director, principal stockholder, or any of such persons' immediate family members or affiliates, in which the amount involved exceeds $120,000 must first be presented to our audit committee for review, consideration and approval. All of our directors, executive officers and employees are required to report to our audit committee any such related party transaction. In approving or rejecting the proposed agreement, our audit committee shall consider the relevant facts and circumstances available and deemed relevant to the audit committee, including but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director's independence. Our audit committee shall approve only those agreements that, in light of known circumstances, are in, or are not inconsistent with, our best interests, as our audit committee determines in the good faith exercise of its discretion. All of the transactions described above were entered into prior to the adoption of this policy.

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DESCRIPTION OF CAPITAL STOCK

General

    Following the closing of this offering, our authorized capital stock will consist of 100,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share, all of which preferred stock will be undesignated.

    As of September 30, 2007, there were 12,070,360 shares of our preferred stock outstanding which will automatically convert into 12,774,270 shares of our common stock immediately prior to the closing of this offering (excluding shares of common stock issuable upon conversion of unpaid dividends on our Series A and Series B preferred stock at the initial public offering price).

    The following description of our capital stock and provisions of our restated certificate of incorporation and amended and restated bylaws are summaries and are qualified by reference to the restated certificate of incorporation and the amended and restated bylaws that will become effective upon the closing of this offering. Copies of these documents have been filed with the SEC as exhibits to our registration statement, of which this prospectus forms a part. The descriptions of our common stock and preferred stock reflect changes to our capital structure that will occur upon the closing of this offering.

Common Stock

    As of December 1, 2007, there were 5,111,643 shares of our common stock outstanding, held of record by 71 stockholders.

    Under the terms of our restated certificate of incorporation that will become effective upon the closing of this offering, the holders of our common stock are generally entitled to one vote for each share held on all matters submitted to a vote of the stockholders and do not have any cumulative voting rights. Holders of our common stock are entitled to receive proportionally any dividends declared by our board of directors out of funds legally available therefor, subject to any preferential dividend or other rights of any then outstanding preferred stock.

    In the event of our liquidation or dissolution, holders of our common stock are entitled to share ratably in all assets remaining after payment of all debts and other liabilities, subject to the prior rights of any then outstanding preferred stock. Holders of our common stock have no preemptive, subscription, redemption or conversion rights. All outstanding shares of our common stock are validly issued, fully paid and nonassessable. The shares to be issued by us in this offering will be, when issued and paid for, validly issued, fully paid and nonassessable.

    The rights, preferences and privileges of holders of our common stock are subject to, and may be adversely affected by, the rights of holders of shares of any series of preferred stock that we may designate and issue in the future.

Preferred Stock

    Under the terms of our restated certificate of incorporation that will become effective upon the closing of this offering, our board of directors is authorized to designate and issue up to 5,000,000 shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock, any or all of which may be greater than or senior to the rights of the common stock. The issuance of preferred stock could adversely affect the voting power of holders of common stock and reduce the likelihood that such holders will receive

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dividend payments or payments on liquidation. In certain circumstances, an issuance of preferred stock could have the effect of decreasing the market price of our common stock.

    Authorizing our board of directors to issue preferred stock and determine its rights and preferences has the effect of eliminating delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from seeking to acquire, a majority of our outstanding voting stock. Upon completion of this offering, there will be no shares of preferred stock outstanding, and we have no present plans to issue any shares of preferred stock.

Registration Rights

    In connection with the sale of our Series D preferred stock, we entered into an amended and restated registration rights agreement, dated as of November 8, 2006, with the holders of shares of our common stock issuable upon conversion of the shares of preferred stock, including shares of preferred stock held by some of our directors, the entities affiliated with Insight Venture Partners and Montagu Newhall Global Partners, who we refer to collectively as holders of restricted shares. Under this amended and restated registration rights agreement, holders of restricted shares can demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing. These registration rights are subject to conditions and limitations, including the right of the underwriters of an offering to limit the number of shares included in such registration and our right not to effect a requested registration within one hundred and eighty days following any offering of our securities. The amended and restated registration rights agreement will terminate on the earlier of five years after the closing of this offering or such time as the holders' securities may be disposed of under Rule 144(k) promulgated under the Securities Act of 1933 within a 90 day period. After this offering, holders of approximately             restricted shares will have registration rights.

Options

    As of September 30, 2007, options to purchase 3,274,016 shares of our common stock were outstanding at a weighted average exercise price of $1.75 per share.

Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation

    Delaware law, our restated certificate of incorporation and our amended and restated bylaws contain provisions that could have the effect of delaying, deferring or discouraging another party from acquiring control of us. These provisions, which are summarized below, are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors.

Certificate of Incorporation and Bylaws

Stockholder Action by Written Consent

    Our restated certificate of incorporation provides that no action can be taken by stockholders except at an annual or special meeting of the stockholders called in accordance with our restated bylaws, and stockholders may not act by written consent in lieu of a meeting.

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Meetings of Stockholders

    Our amended and restated bylaws provide that only a majority of the members of our board of directors then in office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our restated bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Staggered Board; Removal of Directors; Filling Vacancies

    Our board of directors shall be divided into three classes serving staggered three-year terms, with one class being elected each year. Directors may be removed only for cause and then only by the affirmative vote of the holders of 66²/3% or more of the shares then entitled to vote at an election of directors. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum.

Blank Check Preferred Stock

    Our board of directors will be authorized to issue preferred stock without stockholder approval. In this regard, our restated certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock.

Amendment of Restated Certificate of Incorporation and Restated Bylaws

    As required by the Delaware General Corporation Law, any amendment of our restated certificate of incorporation must first be approved by a majority of our board of directors and, if required by law or our restated certificate of incorporation, thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment, except that the amendment of the provisions relating to stockholder action, directors, limitation of liability and the amendment of our restated bylaws and restated certificate of incorporation must be approved by not less than two thirds of the outstanding shares entitled to vote on the amendment. Our restated bylaws may be amended by the affirmative vote of a majority vote of the directors then in office, subject to any limitations set forth in the restated bylaws, and may also be amended by the affirmative vote of at least two thirds of the outstanding shares entitled to vote on the amendment, or, if the board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment.

Advance Notice Requirements for Stockholder Proposals

    Our restated bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. The notice must contain certain information specified in the bylaws.

Section 203 of the Delaware General Corporate Law

    Upon completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a three-year period following the time that this stockholder becomes an interested stockholder, unless

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the business combination is approved in a prescribed manner. A "business combination" includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of a corporation's voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

•

before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;



•

upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or



•

at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

NASDAQ Global Market Listing

    We have applied to list our common stock on The NASDAQ Global Market under the symbol "EXTG."

Transfer Agent and Registrar

    The transfer agent and registrar for our common stock is                          .

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR
NON-U.S. HOLDERS OF COMMON STOCK

    The following is an overview of some U.S. federal income and estate tax considerations of the acquisition, ownership and disposition of shares of our common stock purchased pursuant to this offering by a holder that, for U.S. federal income tax purposes, is not a "U.S. person," as we define that term below. A beneficial owner of our common stock who is not a U.S. person is referred to below as a "non-U.S. holder." This summary is based upon current provisions of the Internal Revenue Code of 1986, as amended, Treasury regulations promulgated thereunder, judicial opinions, administrative pronouncements and published rulings of the U.S. Internal Revenue Service, or IRS, all as in effect as of the date hereof. These authorities may be changed, possibly retroactively, resulting in U.S. federal tax consequences different from those set forth below. We have not sought, and will not seek, any ruling from the IRS or opinion of counsel with respect to the statements made in the following summary, and there can be no complete assurance that the IRS will not take a position contrary to such statements or that any such contrary position taken by the IRS would not be sustained.

    This summary is limited to non-U.S. holders who purchase shares of our common stock issued pursuant to this offering and who hold our common stock as a capital asset, which is generally property held for investment. This summary also does not address the tax considerations arising under the laws of any state, local or non-U.S. jurisdiction, or under U.S. federal estate or gift tax laws, except as specifically described below. In addition, this summary does not address tax considerations that may be applicable to an investor's particular circumstances nor does it address the special tax rules applicable to special classes of non-U.S. holders, including, without limitation:

•

banks, insurance companies or other financial institutions;



•

U.S. expatriates;



•

tax-exempt organizations;



•

tax-qualified retirement plans;



•

brokers or dealers in securities or currencies;



•

traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; or



•

persons that will hold common stock as a position in a hedging transaction, "straddle" or "conversion transaction" for tax purposes.

    If a partnership, including any entity treated as a partnership for U.S. federal income tax purposes, is a holder, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A holder that is a partnership, and partners in such partnership, should consult their own tax advisors regarding the tax consequences of the purchase, ownership and disposition of shares of our common stock.

    For purposes of this discussion, a U.S. person means a person who is for U.S. federal income tax purposes:

•

a citizen or resident of the United States;



•

a corporation, including any entity treated as a corporation for U.S. federal income tax purposes created or organized under the laws of the United States, any state within the United States, or the District of Columbia;



•

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

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•

a trust, if its administration is subject to the primary supervision of a U.S. court and one or more U.S. persons have the authority to control all of its substantial decisions, or other trusts considered U.S. persons for U.S. federal income tax purposes.

THE FOREGOING SUMMARY DOES NOT CONSTITUTE TAX ADVICE, AND, UNDER APPLICABLE U.S. TREASURY REGULATIONS, WE ARE REQUIRED TO INFORM YOU THAT THE INFORMATION CONTAINED HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED TO AVOID PENALTIES IMPOSED UNDER THE INTERNAL REVENUE CODE. ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, NON-U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Dividends

    If distributions are paid on shares of our common stock, the distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. To the extent a distribution exceeds our current and accumulated earnings and profits, it will constitute a return of capital that is applied against and reduces, but not below zero, the adjusted tax basis of your shares in our common stock. Any remainder will constitute gain on the common stock. Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at the rate of 30% or such lower rate as may be specified by an applicable income tax treaty. If the dividend is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States or, if a tax treaty applies, attributable to a U.S. permanent establishment maintained by such non-U.S. holder, the dividend may not be subject to U.S. federal income tax withholding tax, provided certification requirements are met, as described below, but will be subject to U.S. federal income tax imposed on net income on the same basis that applies to U.S. persons generally. A corporate holder under certain circumstances also may be subject to a branch profits tax equal to 30%, or such lower rate as may be specified by an applicable income tax treaty, of a portion of its effectively connected earnings and profits for the taxable year.

    To claim the benefit of a tax treaty or to claim exemption from withholding because the income is effectively connected with the conduct of a trade or business in the United States, a non-U.S. holder must provide a properly executed IRS Form W-8BEN for treaty benefits or W-8ECI for effectively connected income, or such successor forms as the IRS designates, prior to the payment of dividends. These forms must be periodically updated. Non-U.S. holders may be entitled to a refund of any excess amounts withheld by timely filing an appropriate claim for refund.

Gain on Disposition

    A non-U.S. holder generally will not be subject to U.S. federal income tax, including by way of withholding, on gain recognized on a sale or other disposition of shares of our common stock unless any one of the following is true:

•

the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States or, if a tax treaty applies, attributable to a U.S. permanent establishment or a fixed base maintained by such non-U.S. holder;



•

the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more in the taxable year of the disposition and certain other requirements are met; or

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•

our common stock constitutes a United States real property interest by reason of our status as a "United States real property holding corporation," or USRPHC, for U.S. federal income tax purposes at any time during the shorter of (1) the period during which the non-U.S. holder held our common stock or (2) the 5-year period ending on the date such holder disposes of our common stock.

    We believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our United States real property interests relative to the fair market value of our other business assets, we cannot assure you that we will not become a USRPHC in the future. As long as our common stock is regularly traded on an established securities market, however, it will not be treated as a United States real property interest, in general, with respect to any non-U.S. holder that holds no more than 5% of such regularly traded common stock. If we are determined to be a USRPHC and the foregoing exception does not apply, a purchaser may be required to withhold 10% of the proceeds payable to a non-U.S. holder from a disposition of our common stock and the non-U.S. holder generally will be taxed on its net gain derived from the disposition at the graduated U.S. federal income tax rates applicable to U.S. persons.

    Unless an applicable treaty provides otherwise, gain described in the first bullet point above will be subject to U.S. federal income tax imposed on net income on the same basis that applies to U.S. persons generally but generally will not be subject to withholding. Corporate holders also may be subject to a branch profits tax on such gain. Gain described in the second bullet point above may be subject to a flat 30% U.S. federal income tax, which may be offset by U.S. source capital losses. Non-U.S. holders should consult any applicable income tax treaties that may provide for different rules.

U.S. Federal Estate Taxes

    Because we are a U.S. corporation, shares of our common stock owned or treated as owned by an individual who at the time of death is a non-U.S. holder are considered U.S situs assets and may be subject to U.S. federal estate tax.

Information Reporting and Backup Withholding

    Under U.S. Treasury regulations, we must report annually to the IRS and to each non-U.S. holder the gross amount of distributions on our common stock paid to such non-U.S. holder and the tax withheld with respect to those distributions. These information reporting requirements apply even if withholding was not required because the dividends were effectively connected dividends or withholding was reduced or eliminated by an applicable tax treaty. Pursuant to an applicable tax treaty, that information may also be made available to the tax authorities in the country in which the non-U.S. holder resides.

    Provided that we, or our paying agents, have not otherwise been notified by the IRS that backup withholding is required, backup withholding generally will not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. holder of our common stock if the holder has provided the required certification that it is not a U.S. person, or if other requirements are met. Dividends paid to a non-U.S. holder who fails to certify status as a non-U.S. person in accordance with the applicable U.S. Treasury regulations generally will be subject to backup withholding at the applicable rate, which is currently 28%. Dividends paid to non-U.S. holders subject to the 30% withholding tax described above under "Dividends," generally will be exempt from backup withholding.

    Payments of the proceeds from a disposition or a redemption effected outside the United States by a non-U.S. holder of our common stock made by or through a foreign office of a broker

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generally will not be subject to information reporting or backup withholding. However, information reporting, but not backup withholding, generally will apply to such a payment if the broker has specified types of connections with the U.S. unless the broker has documentary evidence in its records that the beneficial owner is a non-U.S. holder and specified conditions are met or an exemption is otherwise established.

    Payment of the proceeds from a disposition by a non-U.S. holder of common stock made by or through the U.S. office of a broker is generally subject to information reporting and backup withholding unless the non-U.S. holder certifies under penalties of perjury that it is not a U.S. person and satisfies other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

    Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against a non-U.S. holder's U.S. federal income tax liability if required information is furnished to the IRS. Non-U.S. holders should consult their own tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

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SHARES ELIGIBLE FOR FUTURE SALE

    Immediately prior to this offering, there was no public market for our common stock. Future sales of significant amounts of our common stock, including shares issued upon exercise of outstanding options or in the public market after this offering, or the anticipation of those sales, could adversely affect public market prices prevailing from time to time and could impair our ability to raise capital through sales of our equity securities. We have applied to have our common stock listed on The NASDAQ Global Market under the symbol "EXTG." We cannot provide any assurances that an active public market for our common stock will develop or be substantial in the future.

    Upon completion of this offering, we will have outstanding             shares of common stock, assuming no exercise of the underwriters' over-allotment option and no exercise of outstanding options. Of these shares, the shares of common stock to be sold in this offering will be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by our "affiliates," as that term is defined in Rule 144 under the Securities Act. All remaining shares of common stock held by existing stockholders will be "restricted securities" as that term is defined in Rule 144 under the Securities Act. Substantially all of these restricted securities will be subject to the lock-up agreements described below. After the expiration of the lock-up agreements, these 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.

Lock-up Agreements

    All of our executive officers and directors and substantially all of our stockholders have agreed that they will not during the 180 day period after the date of this prospectus (subject to extension in certain circumstances) directly or indirectly sell, transfer, dispose of or hedge any shares of our common stock or any of our securities convertible into our common stock without the prior written consent of Thomas Weisel Partners LLC. Certain transfers or dispositions may take place sooner:

•

by gift;



•

to any trust for the direct or indirect benefit of the transferor or the security holder's immediate family, provided that any such transfer shall not involve a dispute for value;



•

by any limited partners, members, trust beneficiaries of stockholders of the security holder, provided that no filing under Section 16(a) of the Exchange Act reporting a reduction in beneficial ownership of shares of common stock, shall be required or made during the 180-day lock-up period;

provided in each case, that the recipient of those shares agrees to be bound by the forgoing restrictions for the duration of the 180 days. The foregoing restrictions do not apply to shares that were acquired in the open market after the date of the underwriting agreement or sold to the underwriters pursuant to an underwriting agreement between us and the underwriters. During the 180 day lock-up period, a 10b5-1 trading plan that complies with Rule 10b5-1 under the Securities Exchange Act of 1934 may be established or amended, so long as there are no sales of our common stock under such plans during the lock-up period.

    We have also agreed that we will not during the 180 day period offer, transfer or dispose of, directly or indirectly, any shares of our common stock, any securities convertible into or exchangeable or exercisable for shares of our common stock or any securities substantially similar to our common stock without the prior written consent of Thomas Weisel Partners LLC. We may, however, continue to grant options and sell shares of common stock pursuant to our stock option plan provided that recipients agree to be bound by these restrictions during the 180 day period.

99

    The 180 day period may be extended if (1) we release earnings or announce material news or a material event relating to our Company during the last 17 days of the lock-up period, or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results during the 15-day period following the last day of the lock-up period. In either case, the lock-up period will be extended for 18 days after the date of the release of the earnings results or the announcement of the material news or material event. To the extent shares of our common stock are released before the expiration of the lock-up period and those shares are sold in the market, the market price of our common stock could decline.

Rule 144

    In general under Rule 144 of the Securities Act, as currently in effect, 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:

•

1% of the number of shares of our common stock then outstanding, which will equal approximately             shares immediately after this offering; or



•

the average weekly trading volume in 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 such sale.

    Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Upon expiration of the 180-day lock-up period described above, shares of our common stock will be eligible for sale under Rule 144. We cannot estimate the number of shares of common stock that our existing stockholders will elect to sell under Rule 144.

    On November 15, 2007, the SEC adopted amendments to Rule 144 which will become effective 60 days after they are published in the Federal Register. Pursuant to the amendments, the holding period for restricted securities of a reporting company for both affiliates and non-affiliates will be reduced from one year to six months. After such time period, affiliates may resell the securities so long as they satisfy the other restrictions of Rule 144. Non-affiliates would be subject only to the current public-information requirement between the end of the six-month holding period and one-year holding period. Under the amendments, both affiliates and non-affiliates holding restricted securities of a non-reporting company would be required to hold such securities for one-year. However, after the one-year holding period, non-affiliates would be entitled to freely resell restricted securities. A reporting company is an issuer that has been subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act for at least 90 days.

Stock Plans

    As of September 30, 2007, we had outstanding options to purchase 3,274,016 shares of common stock, of which options to purchase 2,224,891 shares of common stock were exercisable as of September 30, 2007. We intend to file registration statements on Form S-8 under the Securities Act to register all of the shares of common stock subject to outstanding options and options and other awards issuable pursuant to our equity plans. The filing will take place after the date of this prospectus and such filing will permit the resale of any such shares owned by non affiliates in the public market without restriction under the Securities Act (but subject to the provisions of the lock-up agreement during the 180 day period).

100

Rule 701

    In general, under Rule 701 of the Securities Act, any of our employees, consultants or advisors who purchased shares from us in connection with a qualified compensatory stock plan or other written agreement is eligible to resell those shares 90 days after the effective date of this offering in reliance on Rule 144, but without compliance with the various restrictions, including the holding period, contained in Rule 144. Subject to the 180-day lock-up period described above, approximately              shares of our common stock will be eligible for sale in accordance with Rule 701.

Registration Rights

    Upon the completion of this offering, holders of at least             shares of our common stock will be eligible to exercise certain registration rights under the Securities Act. The shares will become freely tradable upon the effectiveness of any registration statement covering any such shares. See "Description of Common Stock—Registration Rights."

101

UNDERWRITING

    Subject to the terms and conditions set forth in an underwriting agreement, each of the underwriters named below has severally agreed to purchase from us and the selling stockholders the aggregate number of shares of common stock set forth opposite their respective names below:

Underwriters		Number of Shares
Thomas Weisel Partners LLC
William Blair & Company, L.L.C.
Wachovia Capital Markets, LLC
Pacific Crest Securities Inc.
Canaccord Adams Inc.
	Total

    Of the                          shares to be purchased by the underwriters,                           shares will be purchased from us and                          will be purchased from the selling stockholders.

    The underwriting agreement provides that the obligations of the several underwriters are subject to various conditions, including approval of legal matters by counsel. The nature of the underwriters' obligations commits them to purchase and pay for all of the shares of common stock listed above if any are purchased.

    The underwriting agreement provides that we and the selling stockholders will indemnify the underwriters against liabilities specified in the underwriting agreement under the Securities Act, or will contribute to payments that the underwriters may be required to make relating to these liabilities.

    Thomas Weisel Partners LLC expects to deliver the shares of common stock to purchasers on or about                          , 2008.

Over-Allotment Option

    We and the selling stockholders have granted a 30-day over-allotment option to the underwriters to purchase up to a total of                           and                           additional shares of our common stock from us and the selling stockholders, respectively, at the initial public offering price, less the underwriting discount payable by us, as set forth on the cover page of this prospectus. If the underwriters exercise this option in whole or in part, then each of the underwriters will be separately committed, subject to the conditions described in the underwriting agreement, to purchase the additional shares of our common stock in proportion to their respective commitments set forth in the table above.

Determination of Offering Price

    Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined through negotiations between us and the representatives. In addition to prevailing market conditions, the factors to be considered in determining the initial public offering price will include:

•

the valuation multiples of publicly-traded companies that the representatives believe are comparable to us;



•

our financial condition and results of operation;



•

our history and prospects and the outlook for our industry;

102

•

an assessment of our management, our past and present operations, and the prospects for, and timing of, our future revenues;



•

the present state of our development and the progress of our business plan; and



•

the above factors in relation to market values and various valuation measures of other companies engaged in activities similar to ours.

    We cannot assure you that an active or orderly trading market will develop for our common stock or that our common stock will trade in the public markets subsequent to this offering at or above the initial offering price.

Commissions and Discounts

    The underwriters propose to offer the shares of common stock directly to the public at the public offering price set forth on the cover page of this prospectus, and at this price less a concession not in excess of $                          per share of common stock to other dealers specified in a master agreement among underwriters who are members of the National Association of Securities Dealers, Inc. The underwriters may allow, and the other dealers specified may reallow, concessions not in excess of $                          per share of common stock to these other dealers. After this offering, the offering price, concessions and other selling terms may be changed by the underwriters. Our common stock is offered subject to receipt and acceptance by the underwriters and to the other conditions, including the right to reject orders in whole or in part.

    The following table summarizes the compensation to be paid to the underwriters by us and the proceeds, before expenses, payable to us and the selling stockholders:

	Per Share	Total Without Exercise of Over-Allotment Option	Total With Full Exercise of Over-Allotment Option
ExactTarget, Inc.	$	$	$
Selling stockholders
Total		$	$

    We estimate that our total expenses of this offering, excluding the underwriting discount, will be approximately $              million.

Indemnification of Underwriters

    We and the selling stockholders will indemnify the underwriters against specified liabilities, including liabilities under the Securities Act, and to contribute to payments the underwriters may be required to make in respect of those liabilities.

No Sales of Similar Securities

    The underwriters will require all of our directors and officers and substantially all of the selling stockholders to agree not to offer, sell, agree to sell, directly or indirectly, or otherwise dispose of any shares of common stock or any securities convertible into or exchangeable for shares of common stock except for the shares of common stock offered in this offering without the prior written consent of Thomas Weisel Partners LLC for a period of 180 days after the date of this prospectus. These restrictions do not apply to the establishment of a trading plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, provided that no transfers occur under such plan during the lock-up period.

103

    We have agreed that for a period of 180 days after the date of this prospectus, we will not, without the prior written consent of Thomas Weisel Partners LLC, offer, sell or otherwise dispose of any shares of common stock, except for:

•

the shares of common stock offered in this offering;



•

the shares of common stock issuable upon exercise or conversion of options, warrants or securities outstanding on the date of this prospectus; and



•

grants of options to purchase the shares of our common stock that are reserved for issuance under our stock option plans.

    The 180-day restricted periods described above are subject to extension such that, in the event that either (1) during the last 17 days of the 180-day restricted period, we issue an earnings release relating to us or material news or a material event relating to us occurs or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period beginning on the last day of the 180-day period, the restrictions on offers, pledges, sales, contracts to sell or other dispositions of common stock or securities convertible into or exchangeable or exercisable for shares of our common stock described above will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of material news or a material event relating to us.

NASDAQ Global Market Listing

    We have applied to list our common stock on The NASDAQ Global Market under the symbol "EXTG."

Short Sales, Stabilizing Transactions and Penalty Bids

    In order to facilitate this offering, persons participating in this offering may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock during and after this offering. Specifically, the underwriters may engage in the following activities in accordance with the rules of the Securities and Exchange Commission.

Short sales.    Short sales involve the sales by the underwriters of a greater number of shares than they are required to purchase in the offering. Covered short sales are short sales made in an amount not greater than the underwriters' over-allotment option to purchase additional shares from us in this offering. The underwriters may close out any covered short position by either exercising their over-allotment option to purchase shares or purchasing shares in the open market. In determining the source of shares to close out the covered 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. Naked short sales are any short sales in excess of such over-allotment option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering.

Stabilizing transactions.    The underwriters may make bids for or purchases of the shares for the purpose of pegging, fixing or maintaining the price of the shares, so long as stabilizing bids do not exceed a specified maximum.

Penalty bids.    If the underwriters purchase shares in the open market in a stabilizing transaction or syndicate covering transaction, they may reclaim a selling concession from the underwriters and

104

selling group members who sold those shares as part of this offering. Stabilization and syndicate covering transactions may cause the price of the shares to be higher than it would be in the absence of these transactions. The imposition of a penalty bid might also have an effect on the price of the shares if it discourages presales of the shares.

    The transactions above may occur on The NASDAQ Global Market or otherwise. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the shares. If these transactions are commenced, they may be discontinued without notice at any time.

    A prospectus in electronic format may be made available on websites or through other online services maintained by one or more of the underwriters or by their affiliates. In those cases, prospective investors may view offering terms online and, depending upon the particular underwriter, prospective investors may be allowed to place orders online. The underwriters may agree to allocate a specific number of shares to online brokerage account holders. Any such allocation for online distributions will be made by the representative on the same basis as other allocations.

    Other than the prospectus in electronic format, the information on any underwriter's website and any information on any other website maintained by an underwriter is not part of the prospectus in electronic format or the registration statement of which the prospectus in electronic format forms a part, has not been approved and/or endorsed by us or any underwriter or selling stockholder in its capacity as underwriter or selling stockholder and should not be relied upon by investors.

105

LEGAL MATTERS

    The validity of the shares of common stock being offered hereby and certain other matters are being passed upon for us by Ice Miller LLP, Indianapolis, Indiana. Certain legal matters relating to the offering are being passed upon for the underwriters by Choate, Hall & Stewart LLP, Boston, Massachusetts.

EXPERTS

    The financial statements of ExactTarget, Inc. as of December 31, 2005 and 2006, and for each of the years in the three year period ended December 31, 2006, have been included herein in reliance upon the report of KPMG LLP, an independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2006 financial statements refers to the adoption of Statement of Financial Accounting Standards No. 123(R), Share Based Payment, for accounting for share based payments.

WHERE YOU CAN FIND MORE INFORMATION

    We have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the shares of common stock being offered by this prospectus. This prospectus does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and the common stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.

    You can read our SEC filings, including the registration statement, over the Internet at the SEC's website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street NE, Room 1580, Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

    Upon the closing of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for inspection and copying at the public reference room and web site of the SEC referred to above. We also maintain a website at http://www.exacttarget.com, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website is not part of this prospectus.

106

INDEX TO FINANCIAL STATEMENTS

	Page(s)
Report of Independent Registered Public Accounting Firm	F-2
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)	F-5
Statements of Cash Flows	F-6
Notes to Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors
ExactTarget, Inc.:

    We have audited the accompanying balance sheets of ExactTarget, Inc. as of December 31, 2005 and 2006, and the related statements of operations, redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows for each of the years in the three-year 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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, the financial statements referred to above present fairly, in all material respects, the financial position of ExactTarget, Inc. as of December 31, 2005 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.

    As discussed in notes 1 and 7 to the financial statements, effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123 (R), Share-Based Payment.

/s/ KPMG LLP

Indianapolis, Indiana
November 12, 2007

F-2

EXACTTARGET, INC.

Balance Sheets

December 31, 2005, 2006 and September 30, 2007

		As of December 31,
								As of September 30, 2007
		2005			2006
								(unaudited)
Assets
Cash and cash equivalents		$	3,841,795		$	4,940,293		$	4,653,126
Accounts receivable, net			4,406,948			6,492,347			8,603,911
Prepaid expenses			294,340			748,149			1,584,657
Prepaid barter advertising			708,976			532,616			406,142
Deferred income taxes			—			418,909			364,294
Other current assets			155,587			322,832			315,193
	Total current assets		9,407,646			13,455,146			15,927,323
Property and equipment, net			3,378,502			5,267,641			8,508,680
Other assets			345,381			273,952			202,381
Deferred income taxes			—			3,100,265			2,635,172
	Total assets	$	13,131,529			22,097,004			27,273,556
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Deficit
Accounts payable		$	561,306		$	555,945		$	1,181,988
Accrued liabilities			1,048,421			468,677			439,193
Accrued compensation and related expenses			923,996			1,573,517			2,110,463
Current portion of long-term obligations and other			945,653			773,670			708,388
Deferred revenue			7,270,103			10,221,787			11,840,783
Deferred compensation			—			—			288,000
Income tax payable			—			—			27,306
	Total current liabilities		10,749,479			13,593,596			16,596,121
Deferred compensation			288,000			288,000			—
Long-term obligations and other, less current portion			1,650,500			872,968			442,386
Long-term portion of accrued straight-line rent			238,591			189,875			157,219
	Total liabilities		12,926,570			14,944,439			17,195,726
Redeemable convertible preferred stock
Series C redeemable convertible preferred stock, at redemption value $.001 par value; 5,865,922 shares authorized, issued, and outstanding at December 31, 2005 and 2006 and September 30, 2007			11,115,616			11,535,616			11,760,000
Stockholders' deficit
Common stock, $.001 par value. Authorized 25,000,000 shares; issued and outstanding 6,350,707, 5,711,090 and 5,107,789 shares at December 31, 2005 and 2006 and September 30, 2007, respectively			6,350			5,711			5,107
Preferred stock, at respective issuance date fair value. Authorized 7,497,340 shares, issued and outstanding 4,497,340, 5,550,734 and 6,204,438 shares at December 31, 2005 and 2006 and September 30, 2007, respectively			1,476,591			6,413,935			9,116,403
Note receivable for purchase of common stock			(240,000	)		(240,000	)		(240,000	)
Accumulated deficit			(12,153,598	)		(10,562,697	)		(10,563,680	)
	Total stockholders' deficit		(10,910,657	)		(4,383,051	)		(1,682,170	)
	Total liabilities, redeemable convertible preferred stock and stockholders' deficit	$	13,131,529		$	22,097,004		$	27,273,556

See accompanying notes to financial statements.

F-3

EXACTTARGET, INC.

Statements of Operations

Years ended December 31, 2004, 2005 and 2006 and the nine months
ended September 30, 2006 and 2007

			Year Ended December 31,									Nine Months Ended September 30,
			2004			2005			2006			2006			2007
												(unaudited)
Revenues			$	11,584,833		$	19,733,878		$	31,175,449		$	22,008,127		$	34,164,131
Cost of revenues				2,357,650			4,631,942			7,828,275			5,570,823			8,220,649
		Gross profit		9,227,183			15,101,936			23,347,174			16,437,304			25,943,482
Operating expenses:
	Sales and marketing			7,063,082			10,517,954			13,149,772			9,435,898			13,775,458
	Development			2,538,875			3,924,303			5,041,262			3,588,595			5,908,363
	General and administrative			929,238			2,093,401			2,414,662			1,760,976			2,440,792
		Total operating expenses		10,531,195			16,535,658			20,605,696			14,785,469			22,124,613
		Operating income (loss)		(1,304,012	)		(1,433,722	)		2,741,478			1,651,835			3,818,869
Other income (expense), net				(78,031	)		(24,218	)		453,087			479,890			125,624
Income (loss) before taxes				(1,382,043	)		(1,457,940	)		3,194,565			2,131,725			3,944,493
		Income tax expense (benefit)		—			—			(3,284,567	)		—			1,654,670
		Net income (loss)		(1,382,043	)		(1,457,940	)		6,479,132			2,131,725			2,289,823
Accretion of redeemable preferred stock				(195,616	)		(420,000	)		(420,000	)		(315,000	)		(224,384	)
Net income (loss) available to common stockholders			$	(1,577,659	)	$	(1,877,940	)	$	6,059,132		$	1,816,725		$	2,065,439
Net income per common share:
	Basic		$	(0.20	)	$	(0.30	)	$	0.94		$	0.28		$	0.40
	Diluted		$	(0.20	)	$	(0.30	)	$	0.33		$	0.11		$	0.11
Weighted average number of common shares outstanding				7,746,343			6,341,648			6,439,581			6,489,221			5,181,360
Weighted average number of common shares and potential dilutive common equivalents				7,746,343			6,341,648			19,502,037			19,456,563			20,005,367

See accompanying notes to financial statements.

F-4

EXACTTARGET, INC.

Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)

Years ended December 31, 2004, 2005 and 2006 and the nine months ended September 30, 2007

		Series C preferred stock								Series A preferred stock					Series B preferred stock					Series D preferred stock
					Common stock
																							Additional Paid-in capital			Accumulated deficit			Note receivable
		Shares	Amount		Shares		Amount			Shares		Amount			Shares		Amount			Shares	Amount											Total
Stockholders' equity (deficit) at December 31, 2003		—	$	—	9,145,902		$	9,146		4,000,001		$	1,200,000		1,299,929		$	550,000		—	$	—	$	490,544		$	(2,824,871	)	$	(240,000	)	$	(815,181	)
	Net loss	—		—	—			—		—			—		—			—		—		—		—			(1,382,043	)		—			(1,382,043	)
	Issuance of Series C preferred stock	5,865,922		10,500,000	—			—		—			—		—			—		—		—		—			—			—			—
	Stock issuance costs, Series C	—		—	—			—		—			—		—			—		—		—		(153,224	)		—			—			(153,224	)
	Purchase and retirement of stock	—		—	(2,828,695	)		(2,829	)	(537,501	)		(161,250	)	(265,089	)		(112,159	)	—		—		(341,192	)		(5,882,570	)		—			(6,500,000	)
	Exercise of employee stock options	—		—	8,125			8		—			—		—			—		—		—		3,872			—			—			3,880
	Accrued dividends on preferred stock	—		195,616	—			—		—			—		—			—		—		—		—			(195,616	)		—			(195,616	)
Stockholders' equity (deficit) at December 31, 2004		5,865,922	$	10,695,616	6,325,332		$	6,325		3,462,500		$	1,038,750		1,034,840		$	437,841		—	$	—	$	—		$	(10,285,100	)	$	(240,000	)	$	(9,042,184	)
	Net loss	—		—	—			—		—			—		—			—		—		—		—			(1,457,940	)		—			(1,457,940	)
	Exercise of employee stock options	—		—	25,375			25		—			—		—			—		—		—		9,442			—			—			9,467
	Accrued dividends on preferred stock	—		420,000	—			—		—			—		—			—		—		—		(9,442	)		(410,558	)		—			(420,000	)
Stockholders' equity (deficit) at December 31, 2005		5,865,922	$	11,115,616	6,350,707		$	6,350		3,462,500		$	1,038,750		1,034,840		$	437,841		—	$	—	$	—		$	(12,153,598	)	$	.(240,000	)	$	(10,910,657	)
	Net income	—		—	—			—		—			—		—			—		—		—		—			6,479,132			—			6,479,132
	Tax benefit of stock compensation	—		—	—			—		—			—		—			—		—		—		183,741			—			—			183,741
	Issuance of Series D preferred stock	—		—	—			—		—			—		—			—		1,250,000		5,000,000		—			—			—			5,000,000
	Purchase and retirement of stock	—		—	(1,053,394	)		(1,053	)	(166,759	)		(50,028	)	(29,847	)		(12,628	)	—		—		(48,060	)		(4,888,231	)		—			(5,000,000	)
	Exercise of employee stock options	—		—	413,777			414		—			—		—			—		—		—		171,056			—			—			171,470
	Amortization of stock options	—		—	—			—		—			—		—			—		—		—		113,263			—			—			113,263
	Accrued dividends on preferred stock	—		420,000	—			—		—			—		—			—		—		—		(420,000	)		—			—			(420,000	)
Stockholders' equity (deficit) at December 31, 2006		5,865,922	$	11,535,616	5,711,090		$	5,711		3,295,741		$	988,722		1,004,993		$	425,213		1,250,000	$	5,000,000	$	—		$	(10,562,697	)	$	(240,000	)	$	(4,383,051	)
	Net income (unaudited)	—		—	—			—		—			—		—			—		—		—		—			2,289,823			—			2,289,823
	Tax benefit of stock compensation (unaudited)	—		—	—			—		—			—		—			—		—		—		403,286			—			—			403,286
	Issuance Series D preferred stock (unaudited)	—		—	—			—		—			—		—			—		677,500		2,710,000		—			—			—			2,710,000
	Purchase and retirement of stock (unaudited)	—		—	(653,704	)		(654	)	(20,604	)		(6,181	)	(3,192	)		(1,351	)	—		—		(635,392	)		(2,066,422	)		—			(2,710,000	)
	Exercise of employee stock options (unaudited)	—		—	50,403			50		—			—		—			—		—		—		32,257			—			—			32,307
	Amortization of stock options (unaudited)	—		—	—			—		—			—		—			—		—		—		199,849			—			—			199,849
	Accrued dividends on preferred stock (unaudited)	—		224,384	—			—		—			—		—			—		—		—		—			(224,384	)		—			(224,384	)
Stockholders' equity (deficit) at September 30, 2007 (unaudited)		5,865,922	$	11,760,000	5,107,789		$	5,107		3,275,137		$	982,541		1,001,801		$	423,862		1,927,500	$	7,710,000	$	—		$	(10,563,680	)	$	(240,000	)	$	(1,682,170	)

See accompanying notes to financial statements.

F-5

EXACTTARGET, INC.

Statements of Cash Flows

Years ended December 31, 2004, 2005 and 2006 and the nine months
ended September 30, 2006 and 2007

					December 31,									Nine Months Ended September 30,
					2004			2005			2006			2006			2007
														(unaudited)
Cash flows from operating activities:
	Net income (loss)				$	(1,382,043	)	$	(1,457,940	)	$	6,479,132		$	2,131,725		$	2,289,823
	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
		Depreciation and amortization of property and equipment				309,604			924,307			1,929,473			1,336,692			1,931,793
		Share based compensation				—			—			113,263			71,233			199,849
		Deferred tax expense (benefit)				—			—			(3,519,174	)		—			519,708
		Changes in operating assets and liabilities:
			Accounts receivable, net			(1,546,856	)		(1,682,714	)		(2,085,399	)		(1,063,294	)		(2,111,564	)
			Prepaid expenses and other assets			(64,833	)		(364,383	)		(549,625	)		(370,676	)		(502,683	)
			Prepaid barter advertising			(164,709	)		(63,586	)		176,360			68,675			126,473
			Accounts payable and accrued liabilities			311,612			824,194			(777,765	)		(596,931	)		420,651
			Accrued compensation and related expenses			292,475			254,048			649,521			455,819			536,946
			Income taxes payable			—			—			—			—			58,440
			Deferred revenue			1,736,609			2,815,467			2,978,265			1,784,226			1,570,223
				Cash provided by (used in) operating activities		(508,141	)		1,249,393			5,394,051			3,817,469			5,039,659
Cash flows from investing activities:
	Purchases of property and equipment					(904,345	)		(2,547,529	)		(3,818,612	)		(3,060,619	)		(5,172,076	)
	Sales of property and equipment					—			—			—			—			—
	Purchases of short-term investments					(1,000,000	)		—			—			—			—
	Sales of short-term investments					100,000			900,000			—			—			—
				Cash used in investing activities		(1,804,345	)		(1,647,529	)		(3,818,612	)		(3,060,619	)		(5,172,076	)
Cash flows from financing activities:
	Proceeds from notes payable					300,000			1,700,000			—			—			—
	Repayments on capital leases and notes payable					(138,207	)		(414,790	)		(832,152	)		(680,232	)		(590,343	)
	Proceeds from issuance of stock and option exercises					10,503,880			9,467			5,171,470			101,112			2,742,307
	Non-refundable deposit					—			500,000			—			—			—
	Repurchase and retirement of stock					(6,500,000	)		—			(5,000,000	)		—			(2,710,000	)
	Excess tax benefit from stock-based compensation arrangements					—			—			183,741			—			403,286
	Cost of issuance of stock					(153,224	)		—			—			—			—
				Cash provided by (used in) financing activities		4,012,449			1,794,677			(476,941	)		(579,120	)		(154,750	)
Increase in cash and cash equivalents						1,699,963			1,396,541			1,098,498			177,730			(287,167	)
Cash and cash equivalents, beginning of the period						745,291			2,445,254			3,841,795			3,841,795			4,940,293
Cash and cash equivalents, end of the period					$	2,445,254			3,841,795			4,940,293			4,019,525			4,653,126
Supplemental disclosure
	Cash paid for interest				$	116,371		$	101,128		$	188,426		$	144,367		$	66,479
	Cash paid for income taxes				$	—		$	—		$	—		$	—		$	676,487
Supplemental disclosure of noncash investing activities:
	The Company entered into capital lease obligations for property and equipment totaling $300,000 $95,978 and $51,629 in 2004, 2005 and 2006, respectively.

    See accompanying notes to financial statements.

F-6

EXACTTARGET, INC.

Notes to Financial Statements

December 31, 2005 and 2006 and September 30, 2007 (unaudited)

(1)    Summary of Significant Accounting Policies

(a)    Description of Business

    The Company was organized on December 15, 2000 as ExactTarget, LLC, an Indiana limited liability company. On July 14, 2004, ExactTarget, LLC merged into ExactTarget, Inc., a Delaware corporation. The outstanding shares and rights to acquire membership interests of ExactTarget, LLC were exchanged on a one-for-one basis for shares and stock options of ExactTarget, Inc. with the same rights and privileges.

    ExactTarget, Inc. (ExactTarget or the Company), headquartered in Indianapolis, Indiana, is a leading provider of on-demand email marketing software solutions to organizations of all sizes.

(b)    Unaudited Interim Financial

    The accompanying balance sheet as of September 30, 2007, the statements of operations and cash flows for the nine months ended September 30, 2006 and 2007, and the statement of redeemable convertible preferred stock and stockholders' equity (deficit) for the nine months ended September 30, 2007 are unaudited. In the opinion of management, such information includes all adjustments consisting of normal recurring adjustments necessary for a fair presentation of this interim information when read in conjunction with the audited financial statements and notes hereto. Results for the nine months ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

(c)    Reclassifications

    Certain items in 2004 and 2005 have been reclassified to conform to the 2006 presentation.

(d)    Cash and Cash Equivalents

    The Company classifies highly liquid investments with original maturities of three months or less as cash equivalents. Cash and cash equivalents, which include cash in bank accounts, money market accounts, and bank certificates of deposit, are recorded at cost, which approximates fair value.

(e)    Segments

    The Company manages its operations as a single segment for purposes of assessing performance and making operating decisions. Revenue is generated predominately in the United States and all significant assets are held in the United States.

(f)    Revenue Recognition

    The Company derives revenue from subscriptions for its on-demand software. Revenue is generated under sales agreements with multiple elements, which are comprised of subscriptions that include access to the on-demand software, contracted message volume and optimization services. Subscription agreements are typically one year in duration. A specified maximum level of emails is included in each subscription arrangement. The Company receives messaging fees for incremental customer emails sent above the level specified in the subscription arrangement. Arrangements with

F-7

customers do not provide the customer with the right to take possession of the software supporting the on-demand application service at any time.

    Because the Company provides its solution as a service, for any revenues to be recognized, all of the following criteria must be met:

•

Persuasive evidence of an arrangement exists;



•

The fee is fixed or determinable;



•

Collection is probable; and



•

Service has been provided.

    The Company follows the provisions of the Securities and Exchange Commission Staff Accounting Bulletin No. 104, "Revenue Recognition" and the provisions of the Financial Accounting Standards Board Emerging Issues Task Force (EITF) Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables," (EITF No. 00-21). In applying the provisions of EITF No. 00-21, the Company has determined that it does not have objective and reliable evidence of fair value for each undelivered element of its sales agreements that contain a subscription fee for access to its on-demand software, contracted message volume and optimization services. As a result, the elements within the Company's multiple-element sales agreements do not qualify for treatment as separate units of accounting. Accordingly, the Company accounts for fees received under multiple-element arrangements as a single unit of accounting and recognizes the entire arrangement ratably over the term of the related agreement, commencing upon the later of the agreement start date or when all revenue recognition criteria have been met.

    For messaging above the level specified in the subscription arrangement, revenue is recognized in the period the email is sent if collection is considered to be probable.

    Sales tax collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are not included in revenues and cost of revenues in the statement of operations.

(g)    Deferred Revenue

    Deferred revenue consists of billings or payments in advance of revenue recognition and is recorded to revenue as the revenue recognition criteria described above are met. Amounts are recorded as deferred revenue and accounts receivable when the Company has a legal right to enforce payment. The Company generally invoices its customers annually or in periodic installments. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term obligations and other.

(h)    Accounts Receivable

    Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in existing accounts receivable based on a detailed monthly analysis. In estimating the allowance for

F-8

doubtful accounts, the Company considers the age of the receivable, creditworthiness of the customer, and general economic conditions, as well as other factors. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company also establishes an allowance for future credits, which is determined based on historical credit activity related to billing discrepancies, etc. The combined allowance for doubtful accounts and future credits was $407,948 and $540,468 at December 31, 2005 and 2006, respectively, and $437,866 at September 30, 2007. Write-off's against the allowance for the years ended December 31, 2005 and 2006 approximated $129,674 and $125,663, respectively, and $152,882 for the nine months ended September 30, 2007. The Company does not have any off-balance-sheet credit exposure related to its customers.

(i)    Barter Contracts

    Barter contracts provide use of the Company's product in exchange for services, most of which are advertising related. Barter revenue, which is based on the fair value of the services received, is recorded over the contract period (typically one year). Barter advertising expense is recorded when advertising service is rendered by the unrelated entity, and is reflected in the financial statements in marketing expense. Deferred barter revenue is included in the accompanying balance sheets as deferred revenue. Prepaid barter advertising is recorded as an asset in the balance sheet until such services are rendered.

(j)    Use of Estimates

    The preparation of financial statements requires management of the Company to make a number of estimates and assumptions related to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Significant items subject to such estimates and assumptions include the allowance for doubtful accounts receivable, allowance for future credits, the valuation allowance for deferred tax assets and the valuation of share-based payments. Actual results could differ from these estimates.

(k)    Property and Equipment

    Property and equipment are stated at cost. Property and equipment under capital leases are stated at the lesser of the present value of minimum lease payments or the fair value of the asset.

    Depreciation on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets, generally two to seven years. Property and equipment held under capital leases and leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset.

(l)    Impairment of Long-Lived Assets

    In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that

F-9

the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of by sale would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value, less costs to sell, and no longer depreciated. The assets and liabilities of a disposal group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.

(m)    Advertising

    The Company expenses all advertising costs as incurred. Total advertising expense for the years ended December 31, 2004, 2005 and 2006 was $1,095,340, $1,468,033 and $1,463,210, respectively, and $933,201 for the nine months ended September 30, 2007, of which barter advertising was $1,058,387, $1,290,119, $1,293,254 and $853,568 respectively.

(n)    Income Taxes

    Prior to July 14, 2004, ExactTarget was organized as a limited liability company. Accordingly, the allocable share of taxable income or loss was includable in the tax returns of the members and income taxes were not reflected in the Company's financial statements. Following the merger (note 1(a)), ExactTarget became a C corporation and is subject to U.S. Federal and certain state and local income taxes. In connection with the conversion of the LLC interests to C Corporation shares, LLC members exchanged their interests for cash and shares of the new corporation. The exchange of cash produced a taxable gain to the original LLC members, which produced a corresponding increase in the tax basis of the Company's assets. This resulted in intangible tax assets that are amortizable over 15 years for tax purposes (see note 4).

    Subsequent to the merger and change to C corporation status, income taxes are accounted for under the asset and liability method. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

    In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of the deferred tax liabilities, projected future income, and tax planning strategies in making this assessment.

F-10

(o)    Stock Option Plan

    Effective January 1, 2006, the Company adopted the fair value recognition provisions of SFAS No. 123(R), "Share-Based Payment" ("SFAS 123(R)") using the prospective transition method. Under the prospective transition method, the Company applies the provisions of SFAS 123(R) only to new awards granted, and to awards modified, repurchased or cancelled, after the adoption date. Commencing in 2006, compensation cost is based on the grant date fair value of stock option awards granted or modified after January 1, 2006 estimated in accordance with the provisions of SFAS 123(R). The Company recognizes the fair value of its stock option awards as compensation expense on a straight-line basis over the requisite service period of each award, generally four years.

    SFAS 123(R) also requires the Company to estimate forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for those awards that are expected to vest. If the Company's actual forfeiture rate is materially different from its estimate, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

    Prior to the adoption of SFAS 123(R), the Company accounted for options granted to employees and directors using the intrinsic-value-based method in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and had adopted the disclosure only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," or SFAS 123 and SFAS 148, "Accounting for Stock-Based Compensation—Transition and Disclosure" (SFAS 148), which allowed companies to apply the existing accounting rules under APB 25, "Accounting for Stock Issued to Employees," and related Interpretations. As the exercise price of options granted under the Company's plans was equal to or greater than the market price of the underlying common stock on the grant date, no stock-based employee compensation cost was recognized in the Company's net loss for periods prior to the adoption of SFAS 123(R). As required by SFAS 148 prior to the adoption of SFAS 123(R), the Company provided pro forma net loss disclosures for stock-based awards, as if the fair-value-based method defined in SFAS 123 had been applied. See Note 7 for further information regarding stock based compensation.

(p)    Accrued Straight-line Rent

    In accordance with SFAS No. 13, "Accounting for Leases," as amended by SFAS No. 29, "Determining Contingent Rentals," and FASB Technical Bulletin 85-3, "Accounting for Operating Leases with Scheduled Rent Increases," the Company recognizes rental expense for minimum lease payments from operating leases on a straight-line basis. The current portion of accrued straight-line rent, which is included in accounts payable and accrued liabilities, and the noncurrent portion, reported in long-term liabilities on the balance sheet, totaled $288,412, $239,708 and $207,051 at December 31, 2005, 2006 and September 30, 2007, respectively.

(q)    Net Income per Common Share

    Basic net income per common share is computed by dividing net income available for common stockholders by the weighted average number of common shares outstanding for the period in

F-11

accordance with SFAS No. 128, "Earnings per Share". Diluted net income per common share is computed by dividing the sum of net income available for common stockholders by the sum of the weighted average number of common shares outstanding and any dilutive potential common equivalents for the period.

    The following table reconciles the components of basic and diluted net income per common share:

	Year Ended December 31,								Nine Months Ended September 30,
	2004			2005			2006		2006		2007
									(unaudited)
Basic net income (loss) available to common stockholders	$	(1,577,659	)	$	(1,877,940	)	$	6,059,132	$	1,816,725	$	2,065,439
Preferred stock dividends on assumed conversion		—			—			420,000		315,000		224,384
Diluted net income (loss) available for common stockholders		(1,577,659	)		(1,877,940	)		6,479,132		2,131,725		2,289,823
Weighted-average number of common shares outstanding—basic		7,746,343			6,341,648			6,439,581		6,489,221		5,181,360
Effect of assumed exercise of dilutive stock options		—			—			2,242,720		2,260,161		2,237,348
Effect of assumed conversion of convertible preferred stock		—			—			10,819,736		10,707,181		12,586,659
Weighted-average number of common shares outstanding—diluted		7,746,343			6,341,648			19,502,037		19,456,563		20,005,367

(r)    Recent Accounting Pronouncements

    In July 2006, the FASB issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," (FIN 48) which clarifies the accounting for uncertain income tax positions by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting for interim periods and disclosures for uncertain tax positions. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 on January 1, 2007. The impact of FIN 48 did not have a material effect on the Company's consolidated financial position, results of operations or cash flows.

    As of January 1, 2007, the Company did not have any material federal, state, or foreign unrecognized tax benefits. Upon adoption of FIN 48, the Company adopted an accounting policy to classify interest and penalties on unrecognized tax benefits as income tax expense. For the years

F-12

prior to adoption of FIN 48, the Company did not incur interest and penalties on unrecognized tax benefits and, therefore, had no established accounting policy. The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal and state income tax examinations by tax authorities for all periods since inception due to net operating losses. At September 30, 2007, the Company does not expect any material changes to unrecognized tax benefits within the next 12 months.

    In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," or SFAS 157, which defines fair value, establishes a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the effect, if any, the adoption of SFAS 157 will have on its financial statements.

    In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities," or SFAS 159, including an Amendment of SFAS No. 115, which allows an entity to choose to measure certain financial instruments and liabilities at fair value. Subsequent measurements for the financial instruments and liabilities an entity elects to measure at fair value will be recognized in earnings. SFAS 159 also establishes additional disclosure requirements. SFAS 159 is effective for fiscal years beginning after November 15, 2007, with early adoption permitted provided that the entity also adopts SFAS 157. The Company is currently evaluating the effect, if any, the adoption of SFAS 159 will have on its financial statements.

(s)    Recently Adopted Accounting Standards

    Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement 123(R) using the prospective transition method (refer to note 1(o)).

    Effective January 1, 2006, the Company adopted the disclosure requirements of EITF Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should be Presented in the Income Statement (that is, gross versus net presentation) for tax receipts on the face of their income statements (refer to note 1(f)). The scope of this guidance includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, sales, use, value added, and some excise taxes (gross receipt taxes are excluded). The Company has historically presented such taxes on a net basis.

F-13

(2)    Property and Equipment

    Property and equipment, including assets held under capital leases, are summarized as follows at December 31, 2005, 2006 and September 30, 2007:

		As of December 31,
	Estimated Useful Life (in years)							September 30, 2007
		2005			2006
								(unaudited)
Furniture and equipment	2-7	$	3,783,703		$	6,489,269		$	10,201,899
Software	5		856,495			1,602,056			2,858,955
Leasehold improvements	Shorter of lease term or estimated useful life		204,716			317,382			520,689
			4,844,914			8,408,707			13,581,543
Less accumulated depreciation and amortization			(1,466,412	)		(3,141,066	)		(5,072,863	)
		$	3,378,502		$	5,267,641		$	8,508,680

    Depreciation and amortization expense totaled $309,604, $924,307 and $1,929,473 for 2004, 2005, and 2006, respectively, and $1,336,692 and $1,931,793 for the nine months ended September 30, 2006 and 2007, respectively.

    Property and equipment includes assets under capital leases in the amount of $958,780 and $454,249 at December 31, 2005 and 2006, respectively, and $150,350 at September 30, 2007. Accumulated amortization on these assets, which is included in accumulated depreciation and amortization was $528,725 and $335,647 at December 31, 2005 and 2006, respectively, and $123,718 at September 30, 2007.

(3)    Long-Term Obligations and Other

(a)    Notes Payable

    In October 2004, the Company borrowed $300,000 under a note payable collateralized by the underlying equipment purchased with the note proceeds. The note bears interest at 4.75% and is payable in 39 monthly installments, the first three of which are interest only. The remaining 36 installments are in the amount of $9,177. The amount outstanding under the note at December 31, 2006 and September 30, 2007 was $114,978 and $35,233, respectively.

    In December 2005, the Company obtained a $1.7 million bank term loan that is collateralized by the underlying equipment financed and a blanket lien on all Company assets. The loan is a variable rate loan that bears interest of prime plus one percent (9.25% at December 31, 2006) and is payable in 36 monthly installments. Under the terms of the agreement, the Company must maintain a quick ratio of 1.25 to 1 and has minimum net worth requirements. As of December 31, 2006, the Company was in compliance with all of its debt covenants. As a part of its term loan agreement, the Company has a requirement to deliver its audited financial statements within 180 days of year end, which requirement was extended by the bank to November 15, 2007. The 36 monthly installments include a constant principal payment of $47,222 plus the monthly interest amount. The amount outstanding under the note at December 31, 2006 and September 30, 2007 was $1,133,336 and $708,333, respectively.

F-14

    As of December 31, 2006 and September 30, 2007, the principal repayments for the two notes payable during 2007 and 2008 are as follows:

		December 31, 2006		September 30, 2007
				(unaudited)
2007		$	673,634	$	168,886
2008			574,680		574,680
	Total	$	1,248,314	$	743,566

(b)    Lease Agreements

    The Company is obligated under capital leases covering certain property and equipment that expire at various dates during the next two years. The Company also has noncancelable operating leases, primarily for office space and office equipment. Future minimum lease payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) and capital leases as of December 31, 2006 are as follows:

		Capital Leases			Operating Leases
2007		$	107,794		$	647,429
2008			10,808			655,467
2009			—			583,769
2010			—			633,700
2011			—			639,327
Thereafter			—			1,012,268
	Total minimum lease payments		118,602			4,171,960
Less amounts representing interest at 8%			(1,496	)
	Present value of minimum lease payments		117,106
Less current portion			(100,036	)
	Noncurrent portion	$	17,070

    Rent expense was approximately $121,128, $290,620 and $492,191 for the years ended December 31, 2004, 2005 and 2006, respectively, and $521,048 for the nine months ended September 30, 2007.

(c)    License Agreement

    The Company has licensed a patent for Multi-level Electronic Mail Communications Programs. The license, which is a perpetual license, covers the period from its inception in 2004 throughout the life of the patent. As of December 31, 2006 and September 30, 2007, the license agreement requires future payments of $300,000 and $225,000, respectively.

(d)    Hosting Services Agreements

    The Company has agreements with vendors to provide specialized space and related services from which the Company hosts its software application. As of December 31, 2006, the agreements require future minimum payments of $132,600, $132,600 and $49,350 in 2007, 2008 and 2009, respectively.

(e)    Deferred Revenue

    Deferred Revenue that will not be recognized during the succeeding 12 month period is recorded as long-term obligations and other, and totaled $29,636 and $56,217 at December 31, 2005 and 2006, respectively, and $7,444 at September 30, 2007.

F-15

(4)    Income Taxes

    Income tax expense (benefit) attributable to income from continuing operations consists of the following:

		Current		Deferred			Total
Year ended December 31, 2006
	Federal	$	225,418	$	(2,534,656	)	$	(2,309,238	)
	State and local		9,189		(984,518	)		(975,329	)
		$	234,607	$	(3,519,174	)	$	(3,284,567	)
Nine months ended September 30, 2007 (unaudited)
	Federal	$	1,035,107	$	293,890		$	1,328,997
	State and local		99,854		225,819			325,673
		$	1,134,961	$	519,709		$	1,654,670

    The Company has no income tax expense or benefit for the years ended December 31, 2004 and 2005, due to net operating losses offset by a change in the valuation allowance. For the nine months ended September 30, 2006, no income tax expense or benefit was recognized due to uncertainty that the net operating losses would be utilized.

    The difference between actual income taxes and expected federal income taxes using a statutory rate of 34% was as follows:

	Year Ended December 31,
										Nine Months Ended September 30, 2007
	2004			2005			2006
										(unaudited)
Federal income tax at 34%	$	(470,000	)	$	(498,000	)	$	1,086,152		$	1,341,128
Change in valuation allowance		530,000			564,000			(3,661,701	)		—
State income tax, net of federal benefit		—			—			(643,717	)		292,742
Other		(60,000	)		(66,000	)		(65,301	)		20,800
	$	—		$	—		$	(3,284,567	)	$	1,654,670

    In assessing the realizability of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considered historical book income, the scheduled reversal of deferred tax assets, and projected future book and taxable income in making this assessment. Based upon a detailed analysis of historical and projected book and taxable income, the Company determined that the realization of certain deferred tax assets for which a valuation allowance had been previously recorded is considered more likely than not.

F-16

    The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

			December 31,
								September 30, 2007
			2005			2006
								(unaudited)
Deferred tax assets attributable to:
	Net operating loss carryforward		$	1,113,263		$	273,569	$	—
	Alternative minimum tax and state tax credits			—			616,177		387,180
	Intangible assets for tax purposes			2,317,882			2,153,847		2,025,472
	Accrued liability			28,699			40,821		41,930
	Deferred compensation			136,512			142,200		146,466
	Stock compensation			—			44,635		123,680
	Allowance for bad debts			161,139			213,485		172,957
	Deferred revenue			11,904			22,206		2,940
	Property and Equipment			—			12,234		98,841
		Total gross deferred tax assets		3,769,399			3,519,174		2,999,466
Less valuation allowance				(3,661,701	)		—		—
		Net deferred tax assets		107,698			3,519,174		2,999,466
Deferred tax liability-property and equipment				(107,698	)		—		—
		Net deferred tax assets	$	—		$	3,519,174	$	2,999,466

    At December 31, 2006, the Company had net operating loss carryforwards for federal and state income tax purposes of $690,047, which are available to offset future taxable income through 2025. The Company also has state investment tax credit carryforwards of $574,500, which expire commencing in 2014. The credits (which are not refundable) are available presuming the Company maintains operations at its present location for at least 10 years during the term that the tax credit is available.

    In 2004 the Company was awarded $875,000 in State of Indiana incentives for jobs creation. The grant was contingent on the Company creating 101 jobs over a six year period ending December 31, 2009. The credits are earned annually and recorded as a reduction to payroll taxes. The financial statements reflect grant credits of $4,706, $95,746 and $116,109 for 2004, 2005 and 2006 respectively and $116,915 for the nine months ending September 30, 2007. The grant expires in 2010.

(5)    Series C Redeemable Convertible Preferred Stock

    Series C redeemable convertible preferred stock entitles holders to receive cumulative annual dividends at $0.0716 per share, payable in shares of stock at $1.79 per share. Series C dividends are accrued whether or not declared by the board of directors, due to the fact that they are mandatorily redeemable, and were $1,035,616 at December 31, 2006. Dividends for Series C Preferred Stock ceased to accrue on July 14, 2007.

F-17

    In the event of liquidation, Series C holders are entitled to receive the sum of $1.79 per share plus the amount such holders would have received if the Series C was converted to common stock immediately prior to liquidation, provided such sum amount shall not exceed the "Series C Limit" as defined in the Company's Certificate of Incorporation. Liquidation distributions shall first be paid to the Series C holders prior to payment of any distributions to any other series or class of the Company's capital stock.

    Each share of Series C preferred stock shall automatically convert to common stock upon the earlier to occur of a qualified public offering or such date as holders of a majority of the outstanding Series C request such conversion. After July 14, 2009, the holders of the Series C preferred stock may demand that the Company redeem any portion of each holder's shares for cash equal to the Series C purchase price plus all accrued and unpaid dividends. In accordance with the Securities and Exchange Commission Accounting Series Release No. 268, the Company has recorded the Series C preferred stock as temporary equity. The temporary equity is remeasured at each reporting period at the redemption value on that date. The redemption amount at December 31, 2004, 2005 and 2006 was $10,695,616, $11,115,616 and $11,535,616, respectively, and $11,760,000 at September 30, 2007.

(6)    Stockholders' Deficit

    The Company is authorized to issue 25,000,000 shares of common stock and 13,363,262 shares of preferred stock.

    Preferred stock is divided into four separate series, designated as Series A, Series B, Series C and Series D preferred stock. Series A and Series B of preferred stock entitles the holders to receive cumulative annual dividends at the following rates: Series A—$0.015 per share and Series B—$0.02115 per share. The holders of Series D preferred stock are not entitled to receive any dividends unless otherwise declared by the Company's Board of Directors. Cumulative undeclared and unaccrued dividends for Series A and B shares total $314,092 at December 31, 2006.

    In the event of liquidation, holders are entitled to receive the greater of $0.30 per share (Series A) or $0.4231 per share (Series B), plus all accrued but unpaid dividends with respect to each share; or the amount such holders would have received if the Series A or Series B, as applicable, was converted to common stock immediately prior to liquidation. Liquidation distributions shall first be paid to the Series C holders, then to the Series B and Series A holders, pro rata, and, finally, to the common holders. Series D holders are not entitled to any liquidation preferences.

    Each share of preferred stock is convertible at anytime at the option of the holder into common stock at the then applicable conversion rate. In addition, each share of Series A and Series B shall automatically convert to common stock upon the earlier to occur of a qualified public offering, as defined, or such date as holders of at least 75% of the outstanding Series A and Series B request such conversion. Each share of Series D shall automatically convert to common stock upon the earlier to occur of a qualified public offering, such date as holders of a majority of the outstanding Series D request such conversion, or the conversion of all of Series C to common stock.

    On or after December 14, 2006, Series A and B shares may be subject to optional redemption by the Company. The redemption price shall be the sum of the applicable liquidation preference, plus the amount per share of preferred stock based on the appraised value of the Company and the applicable conversion rate for the preferred stock.

F-18

    In November 2006, the Company repurchased 1,053,394 shares of common stock, 166,759 shares of Series A, and 29,847 shares of Series B for $4,213,576, $667,036, and $119,388, respectively, using proceeds from the sale of Series D shares.

(7)    Stock Options

    The Company has a nonqualified stock option plan to provide a continuing long-term incentive to key employees to provide a means of rewarding outstanding performance and to enhance its ability to recruit and retain key personnel. Options granted vest over four years. For options issued prior to July 14, 2004, vesting commences one year from the grant date at 25% and continues to vest at 25% per year for the three years thereafter on the anniversary date of the grant date. For options issued on or after July 14, 2004, 25% of the options granted are exercisable one year from grant and the remaining 75% ratably over the remaining 36 months. Options expire ten years from date of grant and are forfeited if not exercised within 30 days of an employee leaving the Company. In determining the exercise prices for options granted, the Company's Board of Directors estimates the fair value of our common stock on a quarterly basis, with input from management, as of the date of grant. The fair value of the common stock was determined by the Board of Directors after considering a broad range of factors, including peer group trading multiples, the illiquid nature of an investment in the Company's common stock, the Company's historical financial performance and financial position, the Company's future prospects and opportunity for liquidity events, and sale and offer prices of convertible preferred stock in private transactions negotiated at arm's length. Options available for future grants at December 31, 2006 and September 30, 2007 were 207,393 and 1,035,928, respectively.

    The following table sets forth the total stock-based compensation expense resulting from stock options and non-vested stock awards included in the Company's Statements of Operations upon the adoption of SFAS 123R:

	Year Ended December 31, 2006		Nine Months Ended September 30, 2007
			(unaudited)
Cost of revenues	$	21,532	$	35,698
Sales		36,967		63,994
Marketing		3,240		6,842
Development		44,363		79,715
General and administrative		7,161		13,601
Total stock-based compensation expense	$	113,263	$	199,850

    In accordance with SFAS 123R, the Company is also required to present excess tax benefits from the exercise of stock options, if any, as financing cash flows rather than operating cash flows.

    As of December 31, 2006 and September 30, 2007, $548,186 and $1,133,823, respectively, of total unrecognized stock-based compensation expense related to non-vested awards is expected to be recognized over the respective vesting terms of each award through 2011. The weighted average

F-19

term of the unrecognized stock-based compensation expense is 3.3 years and 3.2 years for the year ended December 31, 2006 and nine months ended September 30, 2007, respectively.

    The fair value of options was estimated at the date of grant using a Black-Scholes-Merton option pricing model with the following weighted average assumptions:

	Year ended December 31, 2006		Nine months ended September 30, 2007
Expected volatility	41.21	%	38.24	%
Risk free interest rate	4.75	%	4.84	%
Expected dividend yield	0.00	%	0.00	%
Expected option term (in years)	6.25		6.25

    The expected volatility for the year ended December 31, 2006 and nine months ended September 30, 2007 is based on a volatility of 41.21% and 38.24%, respectively. The Company believes the historical volatility of a peer group of companies is representative of future stock price trends. Therefore, expected volatility is based on historical volatility of the publicly traded stock of a peer group of companies analyzed by the Company over the expected term of the options.

    The risk free interest rate for periods within the contractual life of the Company's stock options is based on the U.S. Treasury yield curve in effect at the time of grant for time periods similar to the expected term of the award. The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and, therefore, used an expected dividend yield of zero in the valuation model. The expected option term of 6.25 years is based on the average of the vesting term and the 10 year contractual lives of all options awarded. Using the assumptions above, the weighted average grant date fair value of options granted during the year ended December 31, 2006 was $1.62.

F-20

    Activity in the option plan for 2006 and in the nine months ended September 30, 2007 is as follows:

		Shares		Weighted average exercise price		Weighted average remaining contractual life	Aggregate intrinsic value
Outstanding
	Balance at December 31, 2005	3,131,892		$	0.7041
	Granted	459,500			4.0000
	Exercised	(413,777	)		0.4144
	Forfeited	(274,661	)		1.1120
	Balance at December 31, 2006	2,902,954			1.2288	6.88	8,044,666
	Granted (unaudited)	449,500			5.0297
	Exercised (unaudited)	(50,403	)		0.6410
	Forfeited (unaudited)	(28,035	)		2.5444
	Balance at September 30, 2007 (unaudited)	3,274,016			1.7498	6.60	16,272,514
Vested or expected to vest at December 31, 2006		2,781,945			1.1762	6.81	7,855,656
Vested or expected to vest at September 30, 2007 (unaudited)		3,157,615			1.6774	6.52	15,922,589
Exercisable at December 31, 2006		1,866,819			0.5124	6.00	6,510,718
Exercisable at September 30, 2007 (unaudited)		2,224,891			0.8002	5.62	13,170,909

    The aggregate intrinsic value represents the total pre-tax intrinsic value, based on a stock price of $6.72 per share at September 30, 2007, which would have been received by the option holders had all option holders exercised their options as of that date. This amount changes based on the current price of the stock. The total intrinsic value of options exercised was $5,303, $92,033, and

F-21

$1,483,637 for the years ended December 31, 2004, 2005 and 2006, respectively, and $187,054 for the nine months ended September 30, 2007.

Options outstanding			Options exercisable
Exercise price	Shares	Weighted average remaining contractual life	Shares
$0.1074	521,416	4.64	521,416
0.2148	111,732	4.81	111,732
0.2685	37,244	4.88	37,244
0.3000	192,500	5.33	192,500
0.4231	860,500	6.53	677,750
1.0000	420,562	7.92	215,250
2.5000	260,500	8.59	88,875
4.0000	498,500	9.25	22,052

(8)    401(k) Savings Plan

    The Company has a defined compensation savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Contributions to the plan may be made at the discretion of the Board of Directors. There were no contributions during the years ended December 31, 2004, 2005, and 2006 and a contribution of $42,649 for the nine months ended September 30, 2007.

(9)    Related Party Transaction

    The Company signed a business development agreement with Insight Business Development, LLC, an affiliate of a significant preferred stockholder, on July 15, 2004. Under the terms of the agreement, the Company paid a quarterly retainer of $18,750 plus reimbursement for reasonable travel costs. Costs incurred under the agreement totaled $37,500, $99,057 and $68,653 in 2004, 2005 and 2006, respectively. The agreement was cancelled by the Company in September 2006.

(10)    Subsequent Events

    In January 2007, the Company completed a second and final round of Series D preferred stock with the issuance of 677,500 shares of Series D for $2,700,000. The Company also repurchased 653,704 shares of common stock, 20,604 shares of Series A, and 3,192 shares of Series B for $2,614,816, $82,416, and $12,768, respectively, using proceeds from the sale of Series D.

    In February 2007, the Company signed a non-cancelable three-year services agreement with a provider of internet content delivery services. The agreement, which was amended in July 2007, calls for monthly service payments over the three-year service term which totals $985,750.

    In March 2007, the Company signed a non-cancelable services agreement effective September 1, 2007 with a provider of network co-location facilities. The agreement calls for an upfront activation

F-22

fee and equal monthly service payments over the initial twelve-month term totaling $261,531 and can be automatically renewed on a month-to-month basis after the initial term.

    In April 2007, the Company received notice of approval to receive an economic incentive package from the State of Indiana and the City of Indianapolis totaling $2,148,091 consisting of a two-year training grant and certain state and local investment tax credits which expire in 2014. The credits are available for the Company to fund training programs, headcount additions and as property tax abatements.

    In April and November 2007, the Company signed addenda to its office operating lease for an additional 13,903 square feet of space through the end of the lease term in 2013. The landlord is required to provide an allowance of up to $103,163 for leasehold improvements for 4,585 square feet of the total space that it expects to take possession of on January 1, 2008. The Company took possession of the other 9,318 square feet of space on June 1, 2007. Amended future minimum lease payments resulting from these addenda are as follows:

2007		$	90,555
2008			234,520
2009			233,014
2010			226,677
2011			228,704
Thereafter			362,115
	Total	$	1,375,585

    In May 2007, the Company signed a three-year hosting services agreement effective September 15, 2007 with a provider to host the Company's financial accounting software application. The agreement calls for an upfront setup fee and equal monthly service payments over the initial three-year term totaling $174,840 and can be automatically renewed on an annual basis after the initial term.

    In June 2007, the Company received stockholder approval to amend and restate its certificate of incorporation to increase the number of shares available to issue under its stock option plan by 1,250,000 shares. The Company is now authorized to issue a total of 4,807,624 shares of common stock under its nonqualified stock option plan.

    In July 2007, the Company obtained an independent valuation of its common stock as of June 30, 2007 to provide additional support for estimates of fair value for the issuance of stock options. As a result of the valuation performed under the fair value standard, beginning in July 2007 the board of directors of the Company has used $5.52 as the per share exercise price of options approved for grant.

    In November 2007, the Company obtained an independent valuation of its common stock as of September 30, 3007 to provide additional support for estimates of fair value for the issuance of stock options. As a result of the valuation performed under the fair value standard, beginning in November 2007 the board of directors of the Company has used $6.72 as the per share exercise price of options approved for grant.

F-23

Shares
Common Stock

Thomas Weisel Partners LLC
William Blair & Company
Wachovia Securities
Pacific Crest Securities
Canaccord Adams

Neither we nor any of the underwriters have authorized anyone to provide information different from that contained in this prospectus. When you make a decision about whether to invest in our common stock, you should not rely upon any information other than the information in this prospectus. Neither the delivery of this prospectus nor the sale of our common stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy these shares of common stock in any circumstances under which the offer or solicitation is unlawful.

Until                          , 2008, 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 underwriter and with respect to their unsold allotments or subscriptions.

PART II—INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution.

    The following table sets forth all costs and expenses, other than underwriting discounts and commissions, payable by the Company in connection with the sale and distribution of the common stock being registered. No portion of such costs and expenses will be borne by the selling stockholders. All amounts shown are estimates except for the SEC registration fee and the FINRA filing fee.

SEC registration fee	$	2,649
FINRA filing fee		9,125
The NASDAQ Global Market listing fee		*
Printing and engraving expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Transfer Agent's fees and expenses		*
Miscellaneous expenses(1)		*
Total:	$	*

*	To be completed by amendment.
(1)	This amount represents additional expenses that may be incurred by the Company in connection with the offering over and above those specifically listed above, including roadshows and mailing and distribution costs.

Item 14.    Indemnification of Directors and Officers.

    The Company is a corporation organized under the laws of the State of Delaware. Section 145 of the Delaware General Corporation Law (the "DGCL") permits a Delaware corporation to 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 (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise. A corporation may indemnify against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding if the person indemnified acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action or suit by or in the right of the corporation to procure a judgment in its favor, no indemnification may be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such action or suit was brought, shall determine upon application that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Section 145 provides that, to the extent a present or former director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him or her in connection therewith.

    Article VIII of our Amended and Restated Certificate of Incorporation ("Charter"), provides that to the fullest extent permitted by the DGCL, no director of our company shall be personally liable to

II-1

us or our stockholders for monetary damages for any breach of fiduciary duty as a director. In addition, our Charter provides that if the DGCL is amended to authorize broader indemnification rights, then the indemnification rights applied should be to fullest extent permitted by the DGCL, as so amended. Article VIII of the Charter further provides that any amendment or repeal of such article by our stockholders will not adversely affect any right or protection existing at the time of such amendment or repeal with respect to any acts or omissions occurring before such amendment or repeal of a director serving at the time of such repeal or modification. In addition, Article VIII of our Charter provides that the right of each of our directors to indemnification and advancement of expenses shall not be exclusive of any other right now possessed or hereafter acquired under any law, bylaw, agreement, vote of stockholders or disinterested director or otherwise.

    Article IV of our Amended and Restated ByLaws, (the "ByLaws"), provides that we will indemnify each of our directors to the fullest extent permitted by the DGCL. Article V of our ByLaws provides that we will indemnify each of our officers to the fullest extent permitted by the DGCL.

    We have entered into agreements to indemnify Messrs. Baggott, Compton, Dorsey, Koutoupes and Maxwell, each of whom is a current member of our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys' fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding.

    We maintain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

    In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act of 1933, as amended, against certain liabilities.

Item 15.    Recent Sales of Unregistered Securities.

    The information presented below describes sales and issuances of securities by the Registrant within the last three years. The information presented below regarding the aggregate consideration received by the Registrant is provided before deduction of offering and other related expenses. The consideration for all such sales and issuances was cash.

        (a)   On November 8, 2006 and January 26, 2007, the Registrant issued a total of 1,927,500 shares of the Registrant's Series D preferred stock, at a purchase price of $4.00 per share, or $7,710,000 in the aggregate, to nine accredited investors. The issuance of convertible preferred stock were exempt pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act").

        (b)   From December 1, 2004 through November 30, 2007, we have issued options to purchase 1,504,500 shares of our common stock to our employees. Options issued under our 2004 stock option plan were granted with exercise prices ranging from $1.00 to $6.72. From December 1, 2004 through November 30, 2007, we have issued and sold an aggregate of 493,409 shares of common stock upon exercise of options for an aggregate consideration of $214,598. The issuance of common stock upon exercise of the options were exempt pursuant to Rule 701 as a transaction pursuant to a compensatory plan. The shares of our common stock issued upon exercise of options are deemed restricted securities for purposes of the Securities Act.

    The issuances of securities in the transactions described in paragraphs (a) and (b) above were effected without registration under the Securities Act in reliance on Section 4(2) and Regulation D promulgated thereunder in that such sales were made without public offering to purchasers who

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represented that they were accredited investors as defined under the Securities Act. The issuances of securities in the transactions described in paragraph (c) above were effected without registration under the Securities Act in reliance on Section 4(2) thereof or Rule 701 thereunder as transactions pursuant to compensatory benefit plans and contracts relating to compensation. None of the foregoing transactions was effected using any form of general advertising or general solicitation as such terms are used in Regulation D under the Securities Act. The recipient of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates or other instruments issued in such transactions. No underwriters were involved in the foregoing sales of securities.

Item 16.    Exhibits and Financial Statement Schedules.

        (a)   Exhibits. Please see Index to Exhibits, which is incorporated herein by reference.

        (b)   Financial Statement Schedules. The following schedules are filed as part of this registration statement:

Schedule II—Valuation and Qualifying Assets

    All other schedules have been omitted because the information required to be presented in them is not applicable or is shown in the financial statements or related notes.

Schedule II—Valuation and Qualifying Accounts

	Balance at Beginning of Period	Recorded to Expenses	Reduction to Revenues	Write-offs		Balance at End of Period
Nine Months September 30, 2007:
Allowance for doubtful accounts and future credits	540,468	120,260	280,760	(503,622	)	437,866
Year Ended December 31, 2006:
Allowance for doubtful accounts and future credits	407,948	117,089	540,189	(524,758	)	540,468
Year Ended December 31, 2005:
Allowance for doubtful accounts and future credits	132,378	294,841	88,461	(107,732	)	407,948

Item 17.    Undertakings.

        (a)   The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        (b)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 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 Act and is, therefore, unenforceable. In the event that 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

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precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        (c)   The undersigned registrant hereby undertakes that:

        (1)   For purposes of determining any liability under the Securities Act, 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.

        (2)   For purposes of determining any liability under the Securities Act, 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.

        (3)   For the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a line of contract or sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

        (4)   For the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;



(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;



(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and



(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

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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, thereunto duly authorized, in the City of Indianapolis, State of Indiana, on December 13, 2007.

EXACTTARGET, INC.
By:	/s/  SCOTT D. DORSEY
	Scott D. Dorsey, President and Chief Executive Officer

    KNOWN ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints William K. Boncosky, Traci M. Dolan and Scott D. Dorsey, and each of them, as his true and lawful attorneys-in-fact and agents, each with the full power of substitution, for him and in his name, place or stead, in any and all capacities, to sign any and all amendments to this Registration Statement (including post-effective amendments), and to sign any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post-effective amendments thereto, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

/s/  SCOTT D. DORSEY Scott D. Dorsey	President, Chief Executive Officer, Director (Principal Executive Officer)	December 13, 2007
/s/  TRACI M. DOLAN Traci M. Dolan	Chief Financial Officer and Executive Vice President Finance and Administration (Principal Financial Officer and Principal Accounting Officer)	December 13, 2007
/s/  CHRIS BAGGOTT Chris Baggott	Director	December 13, 2007
/s/  ROBERT A. COMPTON Robert A. Compton	Director	December 13, 2007
/s/  NIKITAS KOUTOUPES Nikitas Koutoupes	Director	December 13, 2007
/s/  SCOTT M. MAXWELL Scott M. Maxwell	Director	December 13, 2007

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INDEX TO EXHIBITS

Exhibit Number	Description
1.1*	Form of Underwriting Agreement.
3.1	Amended and Restated Certificate of Incorporation in effect prior to the completion of the offering.
3.2*	Form of Restated Certificate of Incorporation of Registrant to be effective upon closing of the offering.
3.3	ByLaws of Registrant in effect prior to completion of the offering.
3.4*	Form of ByLaws of Registrant to be effective upon the closing of the offering.
4.1*	Specimen Common Stock Certificate.
4.2	Amended and Restated Stockholders' Agreement dated November 8, 2006.
5.1*	Opinion of Ice Miller LLP.
10.1	2004 Stock Option Plan.
10.2	Form of Stock Option Agreement.
10.3	Amended and Restated Registration Rights Agreement between Registrant and certain Investors named therein.
10.4*	Form of Employment Agreement between Registrant and each of Scott D. Dorsey, Traci M. Dolan, Scott S. McCorkle, Scott J. Bleczinski and Peter D. McCormick.
10.5	Form of Indemnification Agreements between Registrant and each of the directors of Registrant.
10.6	Loan and Security Agreement between Registrant and Silicon Valley Bank, dated December 1, 2005.
23.1*	Consent of Ice Miller LLP (included in Exhibit 5.1).
23.2	Consent of KPMG LLP, Independent Registered Public Accounting Firm.
24.1	Power of Attorney, pursuant to which amendments to this Form S-1 may be filed, is included on the signature page contained in Part II of this Form S-1.

*

To be filed by amendment.

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QuickLinks

TABLE OF CONTENTS
PROSPECTUS SUMMARY
THE OFFERING
SUMMARY FINANCIAL DATA
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
DILUTION
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
PRINCIPAL AND SELLING STOCKHOLDERS
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
DESCRIPTION OF CAPITAL STOCK
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK
SHARES ELIGIBLE FOR FUTURE SALE
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
EXACTTARGET, INC. Balance Sheets
EXACTTARGET, INC. Statement of Operations
EXACTTARGET, INC. Statements of Redeemable Convertible Preferred Stock and Stockholder's Equity (Deficit)
EXACTTARGET, INC. Statements of Cash Flows
EXACTTARGET, INC. Notes to Financial Statements
PART II—INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
INDEX TO EXHIBITS

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

EXACTTARGET, INC.
Pursuant to Section 102 of the
Delaware General Corporation Law

        ExactTarget, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:

        A.    The original name of this corporation is ExactTarget, Inc. and the date of filing the original Certificate of Incorporation of this corporation with the Secretary of State of the State of Delaware was July 14, 2004.

        B.    Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, this Amended and Restated Certificate of Incorporation restates and integrates and amends the provisions of the Certificate of Incorporation of the corporation.

        C.    The text of the Amended and Restated Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:

        FIRST.    The name of the Corporation is ExactTarget, Inc. (the "Corporation").

        SECOND.    The address of the Corporation's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, Zip Code 19801. The name of its registered agent at such address is The Corporation Trust Company.

        THIRD.    The purpose of the Corporation is to engage in any lawful act or activity for which Corporations may be organized under the General Corporation Law of the State of Delaware ("DGCL").

        FOURTH.    The Corporation is authorized to issue two classes of stock to be designated, respectively, "Common Stock" and "Preferred Stock", each with a par value of $0.001 per share. The Corporation is authorized to issue 25,000,000 shares of Common Stock and 13,363,262 shares of Preferred Stock. The Preferred Stock shall be divided into separate series designated as Series A Preferred Stock, consisting of 3,462,500 shares, Series B Preferred Stock, consisting of 1,034,840 shares, Series C Preferred Stock, consisting of 5,865,922 shares and Series D Preferred Stock, consisting of 3,000,000 shares. The Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and Series D Preferred Stock are herein collectively referred to as the "Preferred Stock".

        The rights, preferences, privileges and restrictions granted to or imposed upon the Common Stock and Preferred Stock are as follows:

        1.     Dividends.

        (a)   The holders of Series A Preferred Stock shall be entitled to receive dividends, out of any funds legally available therefor, at the rate of $.015 per share per annum (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring after the date on which the limited liability company units which were converted into shares of Series A Preferred Stock on July 15, 2004 were first issued by ExactTarget, LLC, the Corporation's predecessor (the "Series A Original Issue Date")), commencing on the Series A Original Issue Date. The holders of Series B Preferred Stock shall be entitled to receive dividends, out of funds legally available therefor, at the rate of $.021155 per share per annum (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring after the date on which the limited liability company units

which were converted into shares of Series B Preferred Stock on July 15, 2004 were first issued by ExactTarget, LLC, the Corporation's predecessor (the "Series B Original Issue Date")), commencing on the Series B Original Issue Date. The holders of Series C Preferred Stock shall be entitled to receive dividends, in preference to any other equity securities of the Corporation (including the Series A Preferred Stock, the Series B Preferred Stock and Series D Preferred Stock), out of funds legally available therefor, at the rate of $.0716 per share per annum (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring from and after July 15, 2004 (the "Series C Original Issue Date" and, together with the Series A Original Issue Date and the Series B Original Issue Date, the "Issue Date")) through and including July 14, 2007. The holders of Series D Preferred Stock shall not be entitled to receive any dividends, unless otherwise declared by the Board of Directors. Dividends on each share of Series A Preferred Stock and each share of Series B Preferred Stock shall be cumulative and shall accrue on each share from and including the applicable Issue Date of such share, and shall accrue from day to day, whether or not earned or declared and whether or not there are profits, surplus, or other funds of the Corporation legally available for the payment of such dividends. Dividends on each share of Series C Preferred Stock shall be cumulative and shall accrue on each share from and including the Series C Original Issue Date through and including July 14, 2007, and shall accrue from day to day, whether or not earned or declared and whether or not there are profits, surplus, or other funds of the Corporation legally available for the payment of such dividends.

        (b)   No dividend shall be declared or paid on the Common Stock in any year, other than dividends payable solely in additional shares of Common Stock, until all accrued but unpaid dividends on the Preferred Stock have been paid in full in cash (with the Series C Preferred Stock receiving such dividends prior and in preference to any other series of Preferred Stock) and no dividends on the Common Stock shall be paid unless dividends are also declared and paid on the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock, in cash, in the same amounts per share (on an as converted to Common Stock basis) as paid in respect of the Common Stock, with the Series C Preferred Stock receiving such dividends prior and in preference to any other series of Preferred Stock, (which amount shall be in addition to the preferential dividends payable in accordance with this Section 1) on an as converted to Common Stock basis.

        2.     Liquidation.

        (a)   Preferred Stock Preference. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntarily or involuntarily or a Sale of the Corporation (as defined below) (a "Liquidation"), prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Common Stock by reason of their ownership thereof and out of the assets or surplus of the Corporation legally available therefor, (i) each holder of the Series A Preferred Stock shall be entitled to receive, in respect of each share of Series A Preferred Stock, the greater of (A) $.30 per share (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series A Preferred Stock after the Series A Original Issue Date) plus an amount equal to all accrued but unpaid dividends on such share of Series A Preferred Stock through and including the date of the Liquidation or (B) the amount that would have been received in respect of such share of Series A Preferred Stock if such share of Series A Preferred Stock had been converted into Common Stock immediately prior to the Liquidation in accordance with Section 3 hereof assuming each share of the other series of Preferred Stock is converted to Common Stock in accordance with Section 3 hereof and all vested options, warrants and other convertible securities (including such securities as shall vest upon a Liquidation) are converted to Common Stock in accordance with their respective terms (the "Series A Liquidation Preference"), (ii) each holder of the Series B

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Preferred Stock shall be entitled to receive, in respect of each share of Series B Preferred Stock, the greater of (A) $.4231 per share (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series B Preferred Stock after the Series B Original Issue Date) plus an amount equal to all accrued but unpaid dividends on such share of Series B Preferred Stock through and including the date of the Liquidation or (B) the amount that would have been received in respect of such share of Series B Preferred Stock if such share of Series B Preferred Stock had been converted into Common Stock immediately prior to the Liquidation in accordance with Section 3 hereof assuming each share of the other series' of Preferred Stock is converted to Common Stock in accordance with Section 3 hereof and all vested options, warrants and other convertible securities (including such securities as shall vest upon a Liquidation) are converted to Common Stock in accordance with their respective terms (the "Series B Liquidation Preference"), (iii) each holder of the Series C Preferred Stock shall be entitled to receive in respect of each share of Series C Preferred Stock the sum of (A) $1.79 per share (the "Series C Purchase Price") (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) plus (B) the amount (the "Series C Participation") that would have been received in respect of such share of Series C Preferred Stock, after the payment of the Series C Purchase Price in respect thereof, if such share of Series C Preferred Stock had been converted into Common Stock immediately prior to the Liquidation in accordance with Section 3 hereof assuming each share of the other series of Preferred Stock is converted to Common Stock in accordance with Section 3 hereof and all vested options, warrants and other convertible securities (including such securities as shall vest upon a Liquidation) are converted to Common Stock in accordance with their respective terms (the collective amounts specified in this clause (iii), the "Series C Liquidation Preference"); provided however that the sum of the Series C Purchase Price plus the Series C Participation payable on a Liquidation (excluding the portion of the Series C Participation payable in respect of the shares of Common Stock which would be issuable upon the conversion of accrued and unpaid dividends on the Series C Preferred Stock in accordance with Section 3 hereof) shall not exceed the Series C Limit (as defined below); and (iv) the holders of Series D Preferred Stock shall not be entitled to any liquidation preference with respect to their shares of Series D Preferred Stock.

        (b)   The term "Series C Limit" shall mean, with respect to each share of Series C Preferred Stock, in connection with a proposed or impending Liquidation (i) if the Net Proceeds received or to be received in respect of a Liquidation are less than or equal to the Initial Threshold, two times the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date); (ii) if the Net Proceeds received or to be received in respect of a Liquidation are greater than the Initial Threshold and less than the Second Threshold, a multiple of the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) which shall be interpolated in a linear manner based upon the actual Net Proceeds received between two times and 2.19 times the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date); and (iii) if Net Proceeds received in respect of a Liquidation are equal to or greater than the Second Threshold, 2.19 times the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date). The term "Net Proceeds" shall mean the actual net proceeds received or to be received by the Corporation or its stockholders in respect of a Liquidation reduced by all (i) costs, fees, expenses in respect of such

3

Liquidation, (ii) indebtedness prepaid, repaid or required to be prepaid or repaid, (iii) all taxes paid or payable in respect thereof. Any contingent consideration, earnout or deferred consideration shall be valued for purposes hereof by the Board at the fair market value thereof, taking into account all relevant factors, including, likelihood of actual receipt thereof, creditworthiness of the obligor and discounts for minority position and illiquidity. The term (a) "Initial Threshold" shall mean, in connection with any proposed or impending Liquidation, an amount of Net Proceeds that if payable to the Corporation or its stockholders upon a Liquidation, would result in each share of Series C Preferred Stock receiving $3.58 (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) in accordance with Section 2(a)(iii) hereof (excluding any payments made or payable in respect of shares of Common Stock which would be issuable upon the conversion of accrued and unpaid dividends on the Series C Preferred Stock in accordance with Section 3 hereof), assuming that the Series C Limit was not applicable, and (b) "Second Threshold" shall mean, in connection with any proposed or impending Liquidation, an amount of Net Proceeds that if payable to the Corporation or its stockholders upon a Liquidation, would result in each share of Series C Preferred Stock receiving $3.92 (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) (excluding any payments made or payable in respect of shares of Common Stock which would be issuable upon the conversion of accrued and unpaid dividends on the Series C Preferred Stock in accordance with Section 3 hereof) assuming (i) such share were converted to Common Stock in accordance with Section 3 hereof (based solely on the Issuance Price) immediately prior to a Liquidation, and (ii) each share of all other series of Preferred Stock is converted to Common Stock in accordance with Section 3 hereof and all vested options, warrants and other convertible securities (including such securities as shall vest upon a Liquidation) are converted to Common Stock in accordance with their terms.

        (c)   "Sale of the Corporation" shall mean (i) any merger or consolidation of the Corporation into or with another entity (except one in which the holders of the equity securities of the Corporation immediately prior to such merger or consolidation continue to hold at least a majority of the voting power of the equity securities of the surviving corporation), (ii) any sale of all or substantially all of the assets of the Corporation, (iii) any other transaction or series of transactions pursuant to, or as a result of, which a single person (or group of affiliated persons) acquires (from the Corporation or directly from the equity holders of the Corporation) or holds equity securities of the Corporation representing a majority of the Corporation's outstanding voting power or (iv) a sale (or multiple sales) of one or more subsidiaries of the Corporation (whether by way of merger, consolidation, reorganization or sale of all or substantially all assets or securities) which constitute all or substantially all of the consolidated assets of the Corporation.

        (d)   Distributions of the Series A Liquidation Preference made to the holders of Series A Preferred Stock and distributions of the Series B Liquidation Preference made to the holders of Series B Preferred Stock shall be made before and in preference to any distribution to the holders of Common Stock, or any other class or series of stock which ranks junior to the Series A Preferred Stock and Series B Preferred Stock. If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full Series A Liquidation Preference to which they shall be entitled and to pay the holders of shares of Series B Preferred Stock the full Series B Liquidation Preference to which they shall be entitled, the holders of Series A Preferred Stock and the holders of Series B Preferred Stock shall share pro rata in any distribution of assets in accordance with their respective Series A Liquidation Preference and/or Series B Liquidation Preference, as the case may be.

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        (e)   Distributions of the Series C Liquidation Preference made to the holders of Series C Preferred Stock shall be made before and in preference to any distribution to the holders of Common Stock, or any other class or series of stock which ranks junior to the Series C Preferred Stock (including the Series A Preferred Stock, the Series B Preferred Stock, and the Series D Preferred Stock). If upon any Liquidation the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series C Preferred Stock the full Series C Liquidation Preference to which they shall be entitled, the holders of Series C Preferred Stock shall share pro rata in any distribution of assets in accordance with their respective Series C Liquidation Preference.

        (f)    Upon completion of the distributions of the Series C Liquidation Preference, the Series B Liquidation Preference and the Series A Liquidation Preference in accordance with Sections 2(a), (b), (d) and (e) above, all of the remaining assets and surplus funds available for distribution to stockholders shall be distributed among the holders of Common Stock and Series D Preferred Stock, pro rata, based upon the number of shares of Common Stock held by each (or, in the case of the Series D Preferred Stock, the number of shares of Common Stock into which such shares then could be converted).

        (g)   Notwithstanding the foregoing, upon any Liquidation, each holder of the Series C Preferred Stock shall be entitled to receive the greater of (i) the amount such holder would have received under Section 2(a) and 2(b) above and (ii) the amount such holder would have received if such holder had converted his, her or its shares of Series C Preferred Stock into shares of Common Stock in accordance with Section 3.

        (h)   If the consideration distributed by the Corporation or received by its stockholders pursuant to this Section 2 or for any other purpose is other than cash, its value will be deemed its fair market value as determined in good faith by the Board of the Corporation (the "Board"). Notwithstanding the foregoing, any securities shall be valued as follows:

        (i)    with respect to securities not subject to investment letter or other similar restrictions on free marketability (which are covered by (ii) below):

        (A)  if traded on a securities exchange or through the Nasdaq National Market, the value shall be deemed to be the average of the closing prices of the securities on such quotation system over the thirty (30) day period ending three (3) days prior to the closing;

        (B)  if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day period ending three (3) days prior to the closing, and

        (C)  if there is no active public market, the value shall be the fair market value thereof, as determined in good faith by the Board; and

        (ii)   with respect to securities which are subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a shareholder's status as an affiliate or former affiliate), the method of valuation shall be to make an appropriate discount from the market value determined as above in (i)(A), (B) or (C) to reflect the approximate fair market value thereof, as determined in good faith by the Board.

        (i)    The Corporation shall give each holder of record of Preferred Stock written notice of such impending transaction not later than twenty (20) days prior to the stockholders' meeting called to approve such transaction, or twenty (20) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the

5

impending transaction and the provisions of this Section 2, and the Corporation shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after the Corporation has given the first notice provided for herein or sooner than five (5) business days after the Corporation has given notice of material changes provided for herein; provided, however, that, with respect to the Series A Preferred Stock and the Series B Preferred Stock, such periods may be shortened upon the written consent of those holders of at least a majority of the then outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as converted to Common Stock basis, with respect to the Series C Preferred Stock, such periods may be shortened upon the written consent of those holders of at least a majority of the then outstanding shares of Series C Preferred Stock, and, with respect to the Series D Preferred Stock, such periods may be shortened upon the written consent of those holders of at least a majority of the then outstanding shares of Series D Preferred Stock.

        (j)    In the event the requirements of this Section 2 are not complied with, the Corporation shall forthwith either:

        (i)    cause such closing to be postponed until such time as the requirements of this Section 2 have been complied with; or

        (ii)   cancel such transaction.

        3.     Conversion. The holders of Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):

        (a)   Right to Convert. Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by, and at the option of, the holder thereof, at any time and from time to time, into such number of fully paid and nonassessable shares of Common Stock as is determined (i) in the case of each share of Series C Preferred Stock, by the quotient of (A) the sum of (x) the Issuance Price (as provided herein) of such share of Series C Preferred Stock, (y) any accrued and unpaid dividends on such share of Series C Preferred Stock from the Series C Original Issue Date through and including July 14, 2007 that have accrued pursuant the terms of Section 1(a) hereof and (z) any declared and unpaid dividends on such share of Series C Preferred Stock that have been declared pursuant to the terms of Section 1(b) hereof and (B) the applicable Conversion Price (as provided herein) in effect at the time of conversion; and (ii) in the case of any other series of Preferred Stock, by the addition of (x) the quotient of the applicable Issuance Price (as provided herein) of such share of Preferred Stock and the applicable Conversion Price, in effect at the time of conversion, plus (y) the quotient of the accrued and unpaid dividends thereon and the fair market value of a share of Common Stock at the time of conversion (as determined by the Board in good faith). The Issuance Price for the Series A Preferred Stock shall be $.30 per share, the Issuance Price for the Series B Preferred Stock shall be $.4231 per share, the Issuance Price for the Series C Preferred Stock shall be $1.79 per share and the Issuance Price for the Series D Preferred Stock shall be $4.00 per share. The Conversion Price for the Series A Preferred Stock shall initially be $.30 per share, the Conversion Price for the Series B Preferred Stock shall initially be $.4231 per share, the Conversion Price for the Series C Preferred Stock shall initially be $1.79 per share, and the Conversion Price for the Series D Preferred Stock shall initially be $4.00 per share, and, in each case, shall be subject to adjustment as provided below. The number of shares of Common Stock into which a share of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock is convertible is hereinafter referred to as the "Conversion Rate" of such series of Preferred Stock. In the event of a notice of redemption pursuant to Section 6 below, the Conversion Rights of the Series A Preferred Stock and the Series B Preferred Stock set forth in this Section 3(a) shall terminate at the close of business on the fifth (5^th) full day preceding the date fixed for redemption, unless the Redemption Price (as

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defined in Section 6) is not paid when due, in which case the Conversion Rights for such Preferred Stock shall continue until such price is paid as provided in Section 6. In the event of a Liquidation of the Corporation, the Conversion Rights shall terminate at the close of business on the first (1^st) full day preceding the date fixed for the payment of any amounts distributable to the holders of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock upon Liquidation.

        (b)   Automatic Conversion.

        (i)    Each share of Series A Preferred Stock and Series B Preferred Stock automatically shall be converted into shares of Common Stock at its then effective Conversion Rate upon the earlier to occur of (i) the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Act"), covering the offer and sale of Common Stock for the account of the Corporation to the public resulting in at least ten million dollars ($10,000,000) in gross proceeds and a pre-offering valuation of the Corporation of at least forty million dollars ($40,000,000) (a "Series A/B QPO") or (ii) the Corporation's receipt of the written consent of the holders of at least seventy-five percent (75%) of the then outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as converted to Common Stock basis.

        (ii)   Each share of Series C Preferred Stock automatically shall be converted into shares of Common Stock at its then effective Conversion Rate upon the earlier to occur of (i) the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Act underwritten by a nationally recognized underwriter satisfactory to the holders of a majority of the Series C Preferred Stock resulting in aggregate proceeds (net of underwriting discounts and commissions) to the Corporation of not less than forty million dollars ($40,000,000) and a per share price of not less than three (3) times the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) (a "Series C QPO") or (ii) the Corporation's receipt of the written consent of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock.

        (iii)  Each share of Series D Preferred Stock automatically shall be converted into shares of Common Stock at its then effective Conversion Rate upon the earlier to occur of (i) the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Act underwritten by a nationally recognized underwriter satisfactory to the holders of a majority of the Series D Preferred Stock resulting in aggregate proceeds (net of underwriting discounts and commissions) to the Corporation of not less than forty million dollars ($40,000,000) and a per share price of not less than three (3) times the Series D Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series D Preferred Stock after November 8, 2006 (the "Original Series D Issue Date") (a "Series D QPO"); (ii) the Corporation's receipt of the written consent of the holders of at least a majority of the then outstanding shares of Series D Preferred Stock; or (iii) the conversion of all of the Series C Preferred Stock (whether in accordance with Section 3(b)(ii) above or otherwise).

        (c)   Mechanics of Conversion. Before any holder of Preferred Stock shall be entitled to convert the same into full shares of Common Stock and to receive certificates therefor, he, she or it shall surrender the certificate or certificates therefor, duly endorsed, at the office of the Corporation or of any transfer agent for the Preferred Stock (or, if the holder notifies the Corporation or its

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transfer agent that such certificates have been lost, stolen or destroyed, such holder shall execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates in lieu of providing such certificates), and shall give written notice to the Corporation at such office that such holder elects to convert the same; provided, however, that in the event of an automatic conversion pursuant to Section 3(b) above, the outstanding shares of Preferred Stock shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent, and provided further that the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such automatic conversion unless the certificates evidencing such shares of Preferred Stock are either delivered to the Corporation or its transfer agent as provided above or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. The Corporation shall, as soon as practicable after such delivery, or such agreement and indemnification in the case of a lost certificate, issue and deliver at such office to such holder of Preferred Stock a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled and a check payable to the holder in the amount of any cash amounts payable as the result of a conversion into fractional shares of Common Stock. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Preferred Stock to be converted, or in the case of automatic conversion on the date of closing of the offering, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. If the conversion is in connection with a public offering of securities of the Corporation, the conversion shall be conditioned upon the closing with the underwriters of the sale of requisite securities provided in Section 3(b) pursuant to such offering, and the conversion shall not be deemed to have occurred until immediately prior to the closing of such sale of securities.

        (d)   Fractional Shares. In lieu of any fractional shares to which the holder of a series of Preferred Stock would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of one share of such series of Preferred Stock as determined in good faith by the Board. Whether or not fractional shares are issuable upon such conversion shall be determined on the basis of the total number of shares of a series of Preferred Stock of each holder at the time of conversion into Common Stock and the number of shares of Common Stock issuable upon such aggregate conversion.

        (e)   Adjustment of Conversion Price. The Conversion Price of the Preferred Stock shall be subject to adjustment from time to time as follows:

        (i)    If at any time after the Series A Original Issue Date, in the case of Series A Preferred Stock, at any time after the Series B Original Issue Date, in the case of Series B Preferred Stock, or at any time after the Series C Original Issue Date, in the case of Series C Preferred Stock, the Corporation shall issue (or, pursuant to subsection 3(e)(i)(2)(c) hereof, shall be deemed to have issued) any Common Stock other than "Excluded Stock" (as defined below) for a consideration per share less than the Conversion Price in effect for the particular series of Preferred Stock immediately prior to the issuance of such Common Stock (excluding stock dividends, subdivisions, split-ups, combinations, dividends or recapitalizations), the Conversion Price for such series of Preferred Stock in effect immediately before each such issuance shall, upon such issuance (except as provided in this Section 3(e)), be lowered to a price equal to the quotient obtained by dividing:

        (1)   an amount equal to the sum of

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        a)    the total number of shares of Common Stock outstanding immediately prior to such issuance, assuming conversion or exercise of any outstanding debt or equity securities which are convertible into Common Stock and conversion or exercise of all options, warrants or other rights to purchase Common Stock (and debt or equity securities which are convertible into Common Stock) immediately prior to such issuance, multiplied by the Conversion Price for such series of Preferred Stock in effect immediately prior to such issuance, plus

        b)    the aggregate consideration received by the Corporation upon such issuance, by

        (2)   the total number of shares of Common Stock outstanding immediately prior to such issuance, assuming conversion or exercise of any outstanding debt or equity securities which are convertible into Common Stock and conversion or exercise of all options, warrants or other rights to purchase Common Stock (and debt or equity securities which are convertible into Common Stock) immediately prior to such issuance, plus the number of shares of Common Stock actually issued (or deemed to have been issued, whether pursuant to subsection 3(e)(i)(c) or otherwise) in the transaction which resulted in the adjustment pursuant to this subsection 3(e)(i).

        For the purposes of any adjustment of the Conversion Price for a series of Preferred Stock pursuant to this clause (i), the following provisions shall be applicable:

        a)    In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any underwriting discounts or commissions paid or incurred by the Corporation in connection with the issuance and sale thereof.

        b)    In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined in good faith by the Board, irrespective of generally accepted accounting treatment.

        c)     In the case of the issuance of (i) options to purchase or rights to subscribe for Common Stock (other than Excluded Stock), (ii) securities by their terms convertible into or exchangeable for Common Stock (other than Excluded Stock) or (iii) options to purchase or rights to subscribe for such convertible or exchangeable securities:

        (A)  the aggregate maximum number of shares of Common Stock deliverable upon exercise of such options to purchase or rights to subscribe for Common Stock shall be deemed to have been issued at the time such options or rights were issued (assuming the satisfaction of any conditions to exercisability, including without limitation, the passage of time, but without taking into account potential anti-dilution adjustments) and for a consideration equal to the consideration (determined in the manner provided in subdivisions (a) and (b) above), if any, received by the Corporation upon the issuance of such options or rights plus the minimum purchase price provided in such options or rights for the Common Stock covered thereby;

        (B)  the aggregate maximum number of shares of Common Stock deliverable upon conversion of or in exchange for any such convertible or exchangeable securities, or upon the exercise of options to purchase or rights to subscribe for such convertible or exchangeable securities and subsequent conversion or exchange thereof (assuming the satisfaction of any conditions to conversion or exercisability in each case, including without limitation, the passage of time, but without taking into account potential antidilution adjustments), shall be deemed to have been issued at the time such securities were issued or such options or rights were issued and for a consideration equal to the consideration received by the Corporation for any such securities and related options or rights (excluding any cash paid on account of accrued interest or accrued dividends), plus the additional minimum consideration, if any, to be received by the Corporation upon the conversion or exchange of such securities or the

9

exercise of any related options or rights (the consideration in each case to be determined in the manner provided in subdivisions (a) and (b) above);

        (C)  on any change in the number of shares or exercise price of Common Stock deliverable to the Corporation upon exercise of any such options or rights or upon conversion of or in exchange for such convertible or exchangeable securities, other than a change resulting from the antidilution provisions thereof, the Conversion Price shall forthwith be readjusted to such Conversion Price as would have been obtained had the adjustment made upon the issuance of such options, rights or securities not converted prior to such change or options or rights related to such securities not converted prior to such change been made upon the basis of such change; and

        (D)  on the expiration of any such options or rights, the termination of any such rights to convert or exchange or the expiration of any options or rights related to such convertible or exchangeable securities, the Conversion Price of a series of Preferred Stock shall forthwith be readjusted to such Conversion Price as would have obtained had the adjustment made upon the issuance of such options, rights, convertible or exchangeable securities or options or rights related to such convertible or exchangeable securities, as the case may be, been made upon the basis of the issuance of only the number of shares of Common Stock actually issued upon the exercise of such options or rights, upon the conversion or exchange of such convertible or exchangeable securities or upon the exercise of the options or rights related to such convertible or exchangeable securities, as the case may be; provided that, any such readjustment shall not have the effect of increasing the Conversion Price of any series of Preferred Stock to an amount which exceeds the Conversion Price existing immediately prior to the time of the original adjustment to which such readjustment relates (as reduced by unrelated adjustments).

        d)    In the case of any option or convertible security with respect to which the maximum number of shares of Common Stock issuable upon exercise or conversion or exchange thereof is not determinable, no adjustment to the Conversion Price shall be made until such number becomes determinable.

        "Excluded Stock" shall mean:

        (1)   all shares of Common Stock or other securities convertible into or exercisable or exchangeable for Common Stock issued and outstanding as of the Series A Original Issue Date, in the case of Series A Preferred Stock, the Series B Original Issue Date, in the case of Series B Preferred Stock, the Series C Original Issue Date in the case of Series C Preferred Stock; provided, however, only to the extent disclosed in the Securities Purchase Agreement (as hereinafter defined), in the case of the Series C Preferred Stock;

        (2)   all shares of Common Stock issued or issuable upon conversion or exercise of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock;

        (3)   all shares of Common Stock or other securities issued or issuable as a dividend or distribution on Common Stock or Preferred Stock;

        (4)   all shares of Common Stock or other securities, or options or warrants to purchase Common Stock or other securities, issuable to employees, officers, directors or consultants for the primary purpose of retaining their services pursuant to any plan, arrangement, agreement, contract or plan, including any incentive stock plan, approved by the Board (and all shares of Common Stock or other securities issued upon exercise or conversion thereof) not to exceed an aggregate of 1,113,232 shares of Common Stock (or other such securities, options or warrants) after the Series C Original Issue Date (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations,

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reclassifications and the like occurring with respect to the Common Stock or such other securities after such date);

        (5)   all securities issuable in a merger, consolidation, acquisition, strategic alliance or similar business combination that is approved by the Board, not to exceed an aggregate of 1,006,703 shares of Common Stock or Common Stock equivalents since the Series C Original Issue Date (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like); and

        (6)   all securities issued or issuable to suppliers, lessors, lenders or technology providers to the Corporation pursuant to any plan or arrangement approved by the Board, not to exceed an aggregate of 193,206 shares of Common Stock or Common Stock equivalents since the Series C Original Issue Date (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like).

        (ii)   If the number of shares of Common Stock outstanding at any time after the Series A Original Issue Date, in the case of the Series A Preferred Stock, the Series B Original Issue Date, in the case of the Series B Preferred Stock, the Series C Original Issue Date, in the case of the Series C Preferred Stock, or the Series D Original Issue Date, in the case of the Series D Preferred Stock, is increased by a stock dividend payable in shares of Common Stock (or options or rights to acquire Common Stock) or by a subdivision or split-up of shares of Common Stock, then, on the date such payment is made or such change is effective, the Conversion Price of each series of Preferred Stock shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of any shares of Preferred Stock of such series shall be increased in proportion to such increase of outstanding shares.

        (iii)  If the number of shares of Common Stock outstanding at any time after the Series A Original Issue Date, in the case of the Series A Preferred Stock, the Series B Original Issue Date, in the case of the Series B Preferred Stock, the Series C Original Issue Date, in the case of the Series C Preferred Stock, or the Series D Original Issue Date, in the case of the Series D Preferred Stock, is decreased by a combination of the outstanding shares of Common Stock, then, on the effective date of such combination, the Conversion Price of each series of Preferred Stock shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of any shares of Preferred Stock of such series shall be decreased in proportion to such decrease in outstanding shares.

        (iv)  In the event, at any time after the Series A Original Issue Date, in the case of the Series A Preferred Stock, the Series B Original Issue Date, in the case of the Series B Preferred Stock, the Series C Original Issue Date, in the case of the Series C Preferred Stock, or the Series D Original Issue Date, in the case of the Series D Preferred Stock, of any capital reorganization, or any reclassification of the stock of the Corporation (other than as a result of a stock dividend or subdivision, split-up or combination of shares), or the consolidation or merger of the Corporation with or into another person (other than a consolidation or merger in which the Corporation is the continuing entity and which does not result in any change in the Common Stock), the shares of Preferred Stock shall, after such reorganization, reclassification, consolidation, merger, sale or other disposition, be convertible into the kind and number of shares of stock or other securities or property of the Corporation or otherwise to which such holder would have been entitled if immediately prior to such reorganization, reclassification, consolidation, merger, sale or other disposition such holder had converted its shares of Preferred Stock of such series into Common Stock. The provisions of this clause (iv) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or other dispositions.

        (v)   All calculations under this Section 3 shall be made to the nearest cent or to the nearest one hundredth (1/100) of a share, as the case may be.

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        (f)    Minimal Adjustments. No adjustment in the Conversion Price for any series of Preferred Stock need be made if such adjustment would result in a change in the Conversion Price of less than $0.01. Any adjustment of less than $0.01 which is not made shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, on a cumulative basis, amounts to an adjustment of $0.01 or more in the Conversion Price.

        (g)   Reduction of Series C Conversion Price. The initial Conversion Price for the Series C Preferred Stock was established based upon the Corporation's representation and warranty in that certain Securities Purchase Agreement, dated as of July 15, 2004, by and among the Corporation and the purchasers of the Series C Preferred Stock named therein (as may be modified, supplemented or amended from time to time, the "Securities Purchase Agreement"), that the Series C Preferred Stock (on an as converted basis) represented no less than 30.67% of the Corporation's fully diluted capital stock as of the date of the Securities Purchase Agreement (assuming the Second Repurchase (as such term is defined in the Securities Purchase Agreement) was consummated as of such date). If such representation and warranty is determined to be untrue or incorrect, the Conversion Price then in effect shall be reduced (but not increased) by an amount such that the shares of Common Stock issuable upon the conversion of the Series C Preferred Stock issued on the Series C Original Issue Date was equal to 30.67% of the Corporation's fully diluted capital stock as of such date (calculated as described in the immediately preceding sentence).

        (h)   No Impairment. The Corporation will not, through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be reasonably necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment. Notwithstanding the foregoing, this provision shall not restrict the Corporation's right to amend its Certificate of Incorporation with the requisite stockholder consent.

        (i)    Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Rate for a series of Preferred Stock pursuant to this Section 3, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to each adjusted holder of Preferred Stock a certificate setting forth such adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based. The Corporation shall, upon written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) all such adjustments and readjustments, (ii) the Conversion Rate at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of such holder's shares of Preferred Stock.

        (j)    Notices of Record Date. In the event of any taking by the Corporation of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property or receive any other right, the Corporation shall mail to each holder of Preferred Stock at least twenty (20) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right.

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        (k)   Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of Preferred Stock such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

        (l)    Notices. Any notice required by the provisions of this Section 3 to be given to any holder of Preferred Stock shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at such holder's address appearing on the Corporation's books.

        (m)  Reissuance of Converted Shares. No shares of Preferred Stock which have been converted into Common Stock after the original issuance thereof shall ever again be reissued and all such shares so converted shall upon such conversion cease to be a part of the authorized shares of the Corporation.

        4.     Voting Rights.

        (a)   General Voting Rights. The holder of each share of Preferred Stock shall be entitled to the number of votes equal to the number of shares of Common Stock into which each share of Preferred Stock could be converted on the record date for the vote or consent of stockholders (or, if no record date is established, on the date such vote is taken or consent solicited) and, except as otherwise required by law, shall have voting rights and powers equal to the voting rights and powers of the Common Stock, provided, however, solely for purposes of this clause (a), that such number of shares of Common Stock issuable upon conversion of shares each series of Preferred Stock shall be determined without giving effect to any conversion in respect of accrued and unpaid dividends thereon. Any provision hereof that entitles any holders of shares of such series of Preferred Stock to consent or vote upon any matter, or take any action, based upon an "as converted to Common Stock" or similar basis shall be interpreted in the foregoing manner. The holder of each share of Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the bylaws of the Corporation and shall vote with holders of the Common Stock upon the election of directors and upon any other matter submitted to a vote of stockholders, except those matters required by law to be submitted to a class vote. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares of Common Stock into which shares of Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half rounded upward to one).

        (b)   Board. The Corporation shall have a minimum of one (1) director and a maximum of five (5) directors, as determined by the vote or consent of the holders of a majority of the voting power of the Corporation's outstanding capital stock from time to time in accordance with any stockholder or voting agreement then in effect.

        5.     Protective Provisions.

        (a)   So long as any shares of Series A Preferred Stock or Series B Preferred Stock shall be outstanding, the Corporation shall not, without first obtaining the approval of the holders of at

13

least a majority of the then outstanding shares of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as converted to Common Stock basis:

        (i)    Directly or indirectly redeem, purchase or otherwise acquire, or permit any subsidiary to redeem, purchase or otherwise acquire, any of the Corporation's equity securities, other than securities from employees, consultants and other service providers of the Corporation pursuant to the terms of employment agreements, option plans, and similar arrangements which have been approved by the Board and except as otherwise provided in Section 6 hereof or pursuant to Section 3.6 of the Amended and Restated Stockholders' Agreement of the Corporation, dated as of November 8, 2006, among the Corporation and certain of its stockholders (as amended, modified or supplemented from time to time, the "Stockholders' Agreement");

        (ii)   Make, or permit any subsidiary to make, any loans or advances to, or guarantees for the benefit of, any individual or entity (other, than a wholly-owned subsidiary established under the laws of a jurisdiction of the United States or any of its territorial possessions), except for reasonable advances to employees, consultants and other service providers in the ordinary course of business;

        (iii)  Except pursuant to Section 3.6 of the Stockholders' Agreement, merge or consolidate with any entity (other than a wholly-owned subsidiary of the Corporation or solely for purposes of reincorporating the Corporation in a different state) where the Corporation is not the surviving entity, unless the value to the holders of Series A Preferred Stock and Series B Preferred Stock in any such transaction exceeds $.60 per share of Series A Preferred Stock (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series A Preferred Stock after the Series A Original Issue Date) and $.8462 per share of Series B Preferred Stock (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series B Preferred Stock after the Series B Original Issue Date);

        (iv)  Except pursuant to Section 3.6 of the Stockholders' Agreement, sell, lease or otherwise dispose of, or permit any subsidiary to sell, lease or otherwise dispose of, all or substantially all of the Corporation's consolidated assets in any transaction or series of related transactions (other than sales in the ordinary course of business), unless the value to the holders of Series A Preferred Stock in any such transaction exceeds $.60 per share of Series A Preferred Stock (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series A Preferred Stock after the Series A Original Issue Date) and the value to the holders of Series B Preferred Stock in any such transaction exceeds $.8462 per share of Series B Preferred Stock (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series B Preferred Stock after the Series B Original Issue Date);

        (v)   Except pursuant to Section 3.6 of the Stockholders' Agreement, liquidate or dissolve the Corporation;

        (vi)  Except pursuant to Section 3.6 of the Stockholders' Agreement, make any amendment to the Corporation's Certificate of Incorporation or this Bylaws, or file any resolution of the Board with the Delaware Secretary of State containing any provisions, which would (i) alter or change the specific rights, powers, terms, preferences or privileges of the Series A Preferred Stock or Series B Preferred Stock; (ii) create any class or series of capital stock or other securities with any rights, powers, terms preferences or privileges senior to the Series A Preferred Stock or Series B Preferred Stock with respect to distributions, liquidation,

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or registration rights; (iii) increase the authorized size of the Board above five (5) members or otherwise change the composition of the Board or the manner by which the Board is elected; or (iv) otherwise materially adversely impair the rights of the holders of Series A Preferred Stock and holders of Series B Preferred Stock under the Corporation's Certificate of Incorporation or Bylaws (provided, however, the creation of any series of capital stock or other securities with any rights, powers, terms, preferences or privileges on a parity with the Series A Preferred Stock or Series B Preferred Stock shall not be deemed to materially adversely impair such rights); or

        (vii) Create, incur, assume, guarantee or be or remain liable with respect to indebtedness for borrowed money in excess of $1,000,000 other than borrowings listed on the Corporation's balance sheet as of June 30, 2004.

        (b)   So long as any shares of Series C Preferred Stock shall be outstanding, the Corporation shall not, without first obtaining the approval of the holders of at least a majority of the then outstanding shares of Series C Preferred Stock, take such actions as are described in Section 2.6 of the Stockholders' Agreement.

        6.     Redemption.

        (a)   Optional Redemption by Corporation. Subject to Section 6(a)(vi), at any time after December 14, 2006, the Corporation shall have the option to redeem, upon the approval of the Board, all but not less than all of the Series A Preferred Stock and the Series B Preferred Stock then outstanding, on the following terms and conditions:

        (i)    The Board shall select an independent business appraiser (who is a member of a recognized professional association) or a regionally or nationally recognized investment banking firm, which is reasonably acceptable to those holders of at least a majority of the Series A Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as converted to Common Stock basis, to determine the then existing value of the Corporation on a going concern, fully-diluted basis as though the Corporation's securities were being traded in the public securities market, with no discount in such valuation due to the lack of liquidity of the Corporation's securities (the "Appraised Value"). The determination of the Appraised Value shall be valid and binding on the Corporation and all of its stockholders and the cost of the appraisal shall be borne by the Corporation.

        (ii)   The redemption price for each share of Series A Preferred Stock and Series B Preferred Stock pursuant to this Section 6 (the "Redemption Price") shall be calculated as the sum of (A) the then applicable Series A Liquidation Preference or Series B Liquidation Preference per share, as the case may be, plus (B) an amount per share of Preferred Stock equal to the following:

AV × CR/CS^FD

Where, AV = Appraised Value

CR = Then applicable Conversion Rate for the applicable series of Preferred Stock

        CS^FD = Total outstanding shares of Common Stock on a fully-diluted basis (assuming exercise or conversion of all then outstanding options, warrants and convertible securities of the Corporation into Common Units, including the Preferred Stock).

        (iii)  At least fifteen (15) days prior to the date on which the Corporation intends to redeem the Series A Preferred Stock and Series B Preferred Stock pursuant to this Section 6 (the "Redemption Date"), the Corporation shall deliver a revocable written notice, by first class or registered mail, postage prepaid, to each holder of Series A Preferred Stock and/or

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Series B Preferred Stock, at his, her or its address last shown on the records of the Corporation, notifying such holder of such redemption, specifying the Redemption Date, the Appraised Value and a description of the factors upon which the determination of the Appraised Value was based, the Redemption Price, and the date on which such holder's Conversion Rights (as described above) as to such shares of Preferred Stock shall terminate (the "Redemption Notice"). On or prior to the Redemption Date, each holder of Series A Preferred Stock and/or Series B Preferred Stock to be redeemed shall sign an acknowledgement of surrender of such Preferred Stock, in a form satisfactory to the Board, in the manner and at the place designated by the Corporation and, thereupon, the Redemption Price of such Preferred Stock shall be payable to the order of such holder. The Redemption Price due to each holder of Series A Preferred Stock and/or Series B Preferred Stock shall be payable, at the sole option of the Board, by either delivery on the Redemption Date of (x) a certified or bank cashier's check in an amount equal to 100% of the aggregate Redemption Price due to such holder or (y) a promissory note (each a "Series A/B Promissory Note") providing for payment of the Redemption Price over a period of up to three years, as determined by the Corporation, with approximately equal quarterly payments of principal, with simple interest at the Prime Rate as announced in the Wall Street Journal on the Redemption Date (adjusted quarterly). Such Series A/B Promissory Note shall be subordinate to all then existing indebtedness of the Corporation to any bank or other commercial lending institution, to the Series C Promissory Notes, and to any other then existing debt obligations of the Corporation (other than debt obligations to affiliates of the Corporation) not explicitly subordinated to such Series A/B Promissory Note. Interest shall be payable to the holders of Series A Preferred Stock and/or Series B Preferred Stock by the Corporation in arrears on a quarterly basis.

        (iv)  From and after the date a holder of Series A Preferred Stock and/or Series B Preferred Stock has received delivery of the Redemption Price, either by receipt of cash or a Series A/B Promissory Note as described above, all rights of such holder, as a holder of Series A Preferred Stock and/or Series B Preferred Stock, shall cease with respect to such redeemed Preferred Stock, and such redeemed Preferred Stock shall be transferred on the books of the Corporation and shall not be deemed to be outstanding for any purpose whatsoever. In the event the Corporation defaults in the payment of the Series A/B Promissory Note, the Corporation shall pay interest on the unpaid principal amount of the Series A/B Promissory Note, from the date of the default and for so long as such default is continuing, at the Prime Rate as announced in the Wall Street Journal on the date of default plus 5%.

        (v)   Notwithstanding anything to the contrary contained in this Section 6, the provisions contained in this Section 6 shall terminate and be of no further force or effect upon a Qualified Public Offering.

        (vi)  Notwithstanding anything to the contrary contained in this Section 6, (i) the provisions contained in this Section 6 shall not apply to the Series C Preferred Stock and (ii) the Corporation shall not exercise its rights under this Section 6 and shall not redeem any Series A Preferred Stock, or Series B Preferred Stock if any Series C Preferred Stock or any Series C Promissory Notes (as defined below) shall be issued and outstanding at the time of the proposed redemption.

        (b)   Mandatory Redemption.

        (i)    At any time after July 15, 2009, the holders of a majority of the shares of Series C Preferred Stock then outstanding may demand that the Corporation redeem all or any portion of each such holder's Series C Preferred Stock then outstanding for a cash amount per share

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(the "Redemption Amount") equal to the Series C Purchase Price (as appropriately adjusted for any stock splits, stock dividends, reverse stock splits, stock combinations, reclassifications and the like occurring with respect to the Series C Preferred Stock after the Series C Original Issue Date) plus all accrued and unpaid dividends. Such right may be exercised by delivery to the Corporation of a notice (a "Mandatory Redemption Notice") requesting such redemption. The Corporation shall redeem such Series C Preferred Stock on a date (a "Mandatory Redemption Date") that is not more than 30 calendar days after the date of delivery of a Mandatory Redemption Notice.

        (ii)   If the shares of Series C Preferred Stock are not redeemed on any Mandatory Redemption Date, the Corporation shall immediately deliver to the holders of Series C Preferred Stock promissory notes (the "Series C Promissory Notes") in an initial principal amount equal to the Redemption Amount which shall be repaid in three annual installments from the date of issuance. The Series C Promissory Notes shall accrue interest at the rate of 15% per annum (calculated assuming a 360-day year). If interest is not paid on any such annual installment date in cash, it shall compound on and as of such date and be added to the principal of the Series C Promissory Notes.

        (iii)  The Series C Promissory Notes shall be senior indebtedness of the Corporation (except that the Series C Promissory Notes shall be subordinate to all then existing indebtedness of the Corporation to any bank or other commercial lending institution and each holder of Series A Preferred Stock, and Series B Preferred Stock hereby agrees that each Series A/B Promissory Note shall be subordinated to the Series C Promissory Notes on terms satisfactory to the holders of a majority in principal amount of the Series C Promissory Notes. The Series C Promissory Notes shall have the benefit of all of the terms, covenants and provisions hereof which inure to the benefit of the holders of Series C Preferred Stock (including the benefit of Section 2.6 of the Stockholders' Agreement).

        (iv)  At any time on or after a Mandatory Redemption Date, each holder of record of shares of Series C Preferred Stock to be redeemed on such date shall be entitled to receive his, her or its Redemption Amount upon actual delivery to the Corporation or its agents of the certificate or certificates representing the shares to be redeemed. On a Mandatory Redemption Date, all rights in respect of such shares of Series C Preferred Stock to be redeemed, except the right to receive the Redemption Amount, shall cease and terminate (unless default shall be made by the Corporation in the payment of the Redemption Amount, in which event such rights shall be exercisable until such default is cured), and such shares shall no longer be deemed to be outstanding, whether or not the certificate or certificates representing such shares have been received by the Corporation.

        (v)   The Series C Preferred Stock shall not be redeemable at the option of the Corporation at any time.

        FIFTH.    The Corporation is to have perpetual existence.

        SIXTH.    Subject to Section 5 hereof, in furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, alter, amend or repeal the bylaws of the Corporation.

        SEVENTH.    The election of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.

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EIGHTH.

        1.     To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages or breach of fiduciary duty as a director. The Corporation shall indemnify to the fullest extent permitted by law any person made or threatened to be made a party to an action or proceeding, whether criminal, civil, administrative, or investigative (a "Proceeding"), by reason of the fact that he or she or his or her testator or intestate is or was a director of the Corporation or any subsidiary of the Corporation or any predecessor of the Corporation or any subsidiary of the Corporation, or serves or served at any other enterprise as director at the request of the Corporation or any predecessor to the Corporation, or acted at the direction of any such director against all expense, liability and loss actually and reasonably incurred or suffered by such person in connection therewith.

        2.     Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation upon a determination that indemnification of the director is proper in the circumstances because he or she 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).

        3.     Expenses (including attorneys' fees) incurred by a director of the Corporation 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 of the director to repay all amounts so advanced in the event that it shall ultimately be determined that such director is not entitled to be indemnified by the Corporation as authorized in this Article VIII.

        4.     The indemnification and advancement of expenses provided by this Article VIII 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), by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation. All rights to indemnification under this Article VIII shall be deemed to be a contract between the Corporation and each director of the Corporation or any of its subsidiaries who serves or served in such capacity at any time while this Article VIII is in effect.

        5.     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 of the Corporation or any of its subsidiaries, or is or was serving at the request of the Corporation as a director of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her or on his or her behalf in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of this Article VIII.

        6.     If this Article VIII or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify or advance expenses to each person entitled to indemnification or advancement of expenses, as the case may be, as to all expense, liability and loss actually and reasonably incurred or suffered by such person and for which indemnification or advancement of expenses, as the case may be, is available to such person pursuant to this Article VIII to the full extent permitted by any applicable portion of this Article VIII that shall not have been invalidated and to the full extent permitted by applicable law.

        7.     Neither any amendment nor repeal of this Article VIII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VIII, shall eliminate or reduce the effect

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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 amendment, repeal of adoption of an inconsistent provision.

NINTH.

        1.     Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of the DGCL or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of the DGCL order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case maybe, agree on any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders of the Corporation, as the case may be, and also on the Corporation

        2.     The Corporation shall not enter into or become bound by any agreement which, by its terms, prevents the Corporation from complying with this Certificate of Incorporation or any agreement which benefits or grants rights to the holders of the Series C Preferred Stock without the prior written consent of at least a majority of the holders of Series C Preferred Stock.

        3.     If the holders of a majority of the outstanding Series C Preferred Stock shall at any time, in good faith, disagree with the Board's determination of "fair market value" hereunder, such holders may submit a notice of disagreement to the Corporation. During the three business days immediately following the Corporation's receipt of such notice, such holders and the Corporation shall negotiate in good faith to determine a mutually agreeable fair market value. If the parties remain unable to reach agreement after such period, they shall engage a valuation firm reasonably acceptable to the Corporation and such majority of holders to resolve such dispute (the "Valuation Firm"). Each of the holders and the Corporation shall provide (at the Corporation's expense) the Valuation Firm with copies of any documents, analyses or other information within its possession or control that the Valuation Firm reasonably requests in order to resolve such dispute. The Valuation Firm shall determine the fair market value as soon as practicable after its engagement to resolve the dispute using customary valuation techniques for other companies or businesses in the same or similar industries as the Corporation (and shall not apply any discount due to the fact that any Preferred Stock or other securities may constitute "restricted securities", may be illiquid or represent a minority interest in the Corporation). The Valuation Firm's determination of the fair market value shall be binding on all of the holders and the Corporation, and not subject to challenge or collateral attack for any reason. The Corporation shall pay all fees, costs and expenses of the Valuation Firm in connection with its engagement to resolve such dispute.

        The Corporation hereby elects not to be governed by Section 203 of the DGCL.

        TENTH.    Subject to Section 5 of Article IV above, 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; provided however, whenever this Certificate of Incorporation requires for action by

19

the Board, the action by a specific director or for action by the holders of any series of shares of the Corporation, as the case may be, the vote or consent of a greater number of directors greater than required by law, the vote or consent of a specific director, or the vote or consent of more than a majority of holders of such series of shares, as the case may be, the provision of this Certificate of Incorporation requiring such greater or specific vote or consent shall not be altered, amended or repealed without first obtaining such greater or specific vote or consent to such alteration, amendment or repeal.

ELEVENTH.

        1.     In anticipation that Insight Venture Partners IV, L.P. and/or its affiliates (collectively "Insight") will be, indirectly or directly, a substantial stockholder of the Corporation, and in recognition of (i) the benefits to be derived by the Corporation through its continued contractual, corporate and business relations with Insight (including service of officers, directors, partners, managers, employees or affiliates of Insight (collectively, "Insight Persons") as directors of the Corporation) and (ii) the difficulties attendant to any director, who desires and endeavors fully to satisfy such director's fiduciary duties, in determining the full scope of such duties in any particular situation, the provisions of this Article XI are set forth to regulate, define and guide the conduct of certain affairs of the Corporation as they may involve Insight and any Insight Persons, and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith.

        2.     Except as Insight may otherwise agree in writing, Insight shall have the right to (i) engage, directly or indirectly, in the same or similar business activities or lines of business as the Corporation and (ii) do business with any client, competitor or customer of the Corporation, with the result that the Corporation shall have no right in or to such activities or any proceeds or benefits therefrom, and neither Insight nor any Insight Person shall be liable to the Corporation or its stockholders for any breach of fiduciary duty claim arising solely by reason of any such activities of Insight or of such Insight Person's participation therein; provided, however, that the foregoing shall not protect Insight or any Insight Person from liability with respect to any such claim arising as a result of Insight's or such Insight Person's taking advantage of a corporate opportunity in violation of this paragraph (2) or as a result of Insight's or such Insight Person's use or disclosure of confidential, proprietary or other information received from the Corporation which is related to the business of the Corporation and is designated as confidential by the Corporation or not generally known or available to the public. Except as otherwise provided in this paragraph (2), in the event that Insight or any Insight Person acquires knowledge, from a person or entity other than the Corporation or any of its subsidiaries, or any of their respective officers, directors, consultants or employees and other than in connection with Insight's ownership of capital stock or participation on the Board, of a potential transaction or matter that may be a corporate opportunity for both Insight and the Corporation, Insight and such Insight Person shall have no duty to communicate or present such corporate opportunity to the Corporation and the Corporation hereby acknowledges that neither Insight nor such Insight Person shall be liable to the Corporation or its stockholders for any breach of fiduciary duty claim, including any breach of fiduciary duty claim as a stockholder of the Corporation, arising solely by reason of the fact that Insight pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to the Corporation. Notwithstanding anything contained in this Article XI to the contrary, if Insight or an Insight Person acquires knowledge, from the Corporation or any of its subsidiaries or any of their respective officers, directors, consultants or employees in connection with Insight's ownership of capital stock or participation on the Board, of a potential transaction or matter that may be a corporate opportunity for both the Corporation and Insight, such corporate opportunity shall belong to the Corporation, and Insight or such Insight Person shall be obligated to promptly advise the Corporation of the same.

        3.     For the purposes of this Article XI, "corporate opportunities" shall not include any business opportunities that the Corporation is not financially or contractually able to undertake, or that are,

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from their nature, not in the line of the Corporation's business or are of no practical advantage to it or that are ones in which the Corporation has no interest or reasonable expectancy.

        4.     Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XI.

        5.     For purposes of this Article XI only, the "Corporation" shall mean the Corporation and all Corporations, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) fifty percent or more of the outstanding voting stock, voting power or similar voting interests.

        6.     Notwithstanding anything in this Certificate of Incorporation to the contrary and in addition to any vote of the Board required by this Certificate of Incorporation, the affirmative vote of the holders of more than 80 percent of the voting power of the capital stock then outstanding, voting together as a single class and on an as converted to Common Stock basis, shall be required to alter, amend or repeal in a manner adverse to the interests of Insight or any Insight Person, or adopt any provision adverse to the interests of Insight or any Insight Person and inconsistent with, any provision of this Article XI.

        TWELFTH.    The Corporation and the holders of a majority of the applicable series of Preferred Stock shall be entitled to waive or amend any provision hereunder which affects the respective rights or preferences of such series of Preferred Stock, unless such provision explicitly requires otherwise.

[Remainder of Page Intentionally Left Blank]

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        IN WITNESS WHEREOF, the Corporation has caused this Certificate to be signed by the undersigned officer this 8^th day of November, 2006.

/s/  SCOTT DORSEY Scott Dorsey, President

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EX-3.3

Exhibit 3.3

BYLAWS
OF
EXACTTARGET, INC.

ARTICLE I
Offices

Section 1.    Principal Office.    The principal office (the "Principal Office") of ExactTarget, Inc. (the "Corporation") shall be 47 South Meridian Street, Suite 300, Indianapolis, Indiana 46204, or such other place as determined by resolution of the Board of Directors of the Corporation (the "Board" or "Board of Directors").

Section 2.    Other Offices.    The Corporation may have such other offices at such other places as the Board may from time to time designate, or as the business of the Corporation may require.

ARTICLE II
Records Pertaining to Share Ownership

Section 1.    Recognition of Stockholders.    The Corporation is entitled to recognize a person registered on its books as the owner of shares of the Corporation as having the exclusive right to receive dividends and to vote those shares, notwithstanding any other person's equitable or other claim to, or interest in, those shares.

Section 2.    Transfer of Shares.    Shares are transferable only on the books of the Corporation, subject to any transfer restrictions imposed by the Certificate of Incorporation, these Bylaws, or an agreement among the Corporation and the stockholders of the Corporation. Shares may be so transferred upon presentation of the certificate representing the shares, endorsed by the appropriate person or persons, and accompanied by (a) reasonable assurance that those endorsements are genuine and effective, and (b) a request to register the transfer. Transfers of shares are otherwise subject to the provisions of the Delaware General Corporation Law, as amended (the "DGCL").

Section 3.    Certificates.    Each stockholder is entitled to a certificate signed (manually or in facsimile) by the President or a Vice President and the Secretary or an Assistant Secretary, setting forth (a) the name of the Corporation and that it was organized under Delaware law, (b) the name of the person to whom issued, and (c) the number, class, and, if applicable, series of shares represented. The Board of Directors shall prescribe the form of the certificate.

Section 4.    Lost or Destroyed Certificates.    Any person claiming a certificate to be lost or destroyed shall make an affidavit or affirmation of that fact and shall give the Corporation, if the Board or the President shall so require, and/or the transfer agents and registrars, if they shall so require, a bond of indemnity, in form and with one or more sureties satisfactory to the Board or the President and/or the transfer agents and registrars, in such amount as the Board or the President may direct and/or the transfer agents and registrars may require whereupon a new certificate may be issued of the same tenor and for the same number of shares as the one alleged to be lost or destroyed.

Section 5.    Stockholder Addresses.    Every stockholder shall furnish the Secretary with an address to which notices of meetings and all other notices may be served upon such stockholder or mailed to such stockholder, and in default thereof notices may be addressed to such stockholder at such stockholder's last known address or at the Principal Office.

ARTICLE III
Meetings of the Stockholders

Section 1.    Annual Meetings.    Annual meetings of the stockholders shall be held each year on the first Tuesday in March for the purpose of electing Directors of the Corporation ("Directors") and for the transaction of such other business as may legally come before the annual meeting. If for any reason the annual meeting shall not be held at the date and time set forth herein, the same may be held at any time thereafter, as determined by the Board of Directors or the business to be transacted at such annual meeting may be transacted at any special meeting of the stockholders called for that purpose.

Section 2.    Special Meetings.    Special meetings of the stockholders may be called by the President or by the Board of Directors. Special meetings of the stockholders shall be called upon delivery to the Secretary of the Corporation of one or more written demands for a special meeting of the stockholders describing the purposes of that meeting and signed and dated by the holders of at least twenty-five percent (25%) of all the votes entitled to be cast on any issue proposed to be considered at that meeting.

Section 3.    Notice of Meetings.    The Corporation shall deliver or mail written notice stating the date, time, and place of any stockholders' meeting and, in the case of a special stockholders' meeting or when otherwise required by law, a description of the purposes for which the meeting is called, to each stockholder of record entitled to vote at the meeting, at such address as appears in the records of the Corporation and at least ten (10) days, but no more than sixty (60) days, before the date of the meeting. A stockholders' meeting shall be held at such place, either in or out of the State of Delaware, as may be specified by the Board of Directors in the respective notice for such meeting.

Section 4.    Waiver of Notice.    A stockholder may waive notice of any meeting, before or after the date and time of the meeting as stated in the notice, by delivering a signed waiver to the Corporation for inclusion in the minutes. A stockholder's attendance at any meeting, in person or by proxy (a) waives objection to lack of notice or defective notice of the meeting, unless the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) waives objection to consideration of a particular matter at the meeting that is not within the purposes described in the meeting notice, unless the stockholder objects to considering the matter when it is presented.

Section 5.    Record Date.    The Board of Directors may fix a record date, which may be a future date, for the purpose of determining the stockholders entitled to notice of a stockholders' meeting, to demand a special meeting, to vote, or to take any other action. A record date may not exceed seventy (70) days before the meeting or action requiring a determination of stockholders. If the Board of Directors does not fix a record date, the record date shall be the date of notice of the meeting or other action.

Section 6.    Voting by Proxy.    A stockholder may appoint a proxy to vote or otherwise act for the stockholder pursuant to a written appointment form executed by the stockholder or the stockholder's duly authorized attorney-in-fact. An appointment of a proxy is effective when received by the Secretary or other Officer or agent of the Corporation authorized to tabulate votes. The general proxy of a fiduciary is given the same effect as the general proxy of any other stockholder. A proxy appointment is valid for eleven (11) months unless otherwise expressly stated in the appointment form.

Section 7.    Voting Lists.    After a record date for a stockholders' meeting has been fixed, the Secretary shall prepare an alphabetical list of all stockholders entitled to notice of the meeting showing the address and number of shares held by each stockholder. The list shall be kept on file at the Principal Office or at a place identified in the meeting notice in the city where the meeting will be held. The list shall be available for inspection and copying by any stockholder entitled to vote at the meeting, or by the stockholder's agent or attorney authorized in writing, at any time during regular business hours, beginning five (5) business days before the date of the meeting through the meeting. The list shall also be made available to any stockholder, or to the stockholder's agent or attorney authorized in writing, at the meeting and any adjournment thereof. Failure to prepare or make

available a voting list with respect to any stockholder's meeting shall not affect the validity of any action taken at such meeting.

Section 8.    Quorum; Approval.    At any meeting of stockholders, a majority of the votes entitled to be cast on a matter at the meeting constitutes a quorum; provided, however, a majority of the Series C Preferred Stockholders entitled to vote on a matter at the meeting must be present to constitute a quorum. If a quorum is present when a vote is taken, action on a matter is approved if the votes cast in favor of the action exceed the votes cast in opposition to the action, unless a greater number is required by law, the Certificate of Incorporation, these Bylaws, or an agreement among the Corporation and the stockholders of the Corporation.

Section 9.    Action by Consent.    Any action required or permitted to be taken at a stockholders' meeting may be taken without a meeting if the action is taken pursuant to the terms of Section 228 of the DGCL. The action must be evidenced by one or more written consents describing the action taken, signed by all the stockholders required to vote on the action, and delivered to the Corporation for inclusion in the minutes. If not otherwise determined pursuant to Section 5 of this Article III, the record date for determining stockholders entitled to vote on an action taken without a meeting is the date the first stockholder signs the consent to such action.

Section 10.    Presence.    Any or all stockholders may participate in any annual or special stockholders' meeting by, or through the use of, any means of communication by which all stockholders participating may simultaneously hear each other during the meeting. A stockholder so participating is deemed to be present in person at the meeting.

Section 11.    Place of Meetings.    Meetings of the stockholders of the Corporation shall be held at such place, either in or out of the State of Delaware, as may be specified by the Board of Directors.

ARTICLE IV
Board of Directors

Section 1.    Powers and Duties.    In addition to the powers and duties expressly conferred upon it by the DGCL, the Certificate of Incorporation or these Bylaws, the Board may exercise all such powers of the Corporation and do all such lawful acts and things as are not inconsistent with the law, the Certificate of Incorporation or these Bylaws.

Section 2.    Number and Terms of Office; Qualifications.    The Corporation shall have a minimum of one (1) Director and a maximum of five (5) Directors, as determined by the vote or consent of the holders of a majority of the voting power of the Corporation's outstanding capital stock from time to time in accordance with any stockholder or voting agreement then in effect. Directors are elected at each annual stockholders' meeting and serve for a term expiring at the following annual stockholders' meeting. A Director who has been removed pursuant to Section 3 of this Article IV ceases to serve immediately upon removal; otherwise, a Director whose term has expired continues to serve until a successor is elected and qualifies or until there is a decrease in the number of Directors. A person need not be a stockholder or a Delaware resident to qualify to be a Director.

Section 3.    Removal.    Except as may be otherwise specifically provided in a written agreement among the Corporation and the stockholders of the Corporation or the Certificate of Incorporation, any Director may be removed with or without cause by action of the stockholders taken at any meeting the notice of which states that one of the purposes of the meeting is removal of the Director.

Section 4.    Vacancies.    Except as may be otherwise specifically provided in a written agreement among the Corporation and the stockholders of the Corporation or the Certificate of Incorporation, if a vacancy occurs on the Board of Directors, including a vacancy resulting from an increase in the number of Directors, the Board of Directors may fill the vacancy. If the Directors remaining in office constitute fewer than a quorum of the Board, the Directors remaining in office may fill the vacancy by the affirmative vote of a majority of those Directors. Any Director elected to fill a vacancy holds office until the next annual meeting of the stockholders and until a successor is elected and qualifies.

Section 5.    Annual Meetings.    Unless otherwise agreed by the Board of Directors, the annual meeting of the Board shall be held immediately following the annual meeting of the stockholders, at the place where the meeting of stockholders was held, for the purpose of electing Officers and considering any other business which may be brought before the meeting. Notice is not necessary for any annual meeting.

Section 6.    Regular and Special Meetings.    Regular meetings of the Board of Directors may be held pursuant to a resolution of the Board of Directors establishing a method for determining the date, time, and place of those meetings. Notice is not necessary for any regular meeting. Special meetings of the Board of Directors may be held upon the call of the President or any Director and upon at least twenty-four (24) hours' prior written or oral notice specifying the date, time, and place of the meeting. Notice of a special meeting may be waived in writing before or after the time of the meeting. The waiver must be signed by the Director entitled to the notice and filed with the minutes of the meeting. Attendance at or participation in a meeting waives any required notice of the meeting, unless at the beginning of the meeting (or promptly upon the Director's arrival) the Director objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

Section 7.    Quorum.    A quorum for the transaction of business at any meeting of the Board of Directors consists of a majority of the number of Directors actually on the Board of Directors at the time of the meeting (or, if greater, one-third of the number of authorized Directors), unless there is only one (1) Director actually on the Board of Directors, in which case one (1) Director shall constitute a quorum; provided, however, at least one Director appointed by the Series C Preferred Stockholders, if any, must be present at the meeting to constitute a quorum. If a quorum is present when a vote is taken, action on a matter is approved if the action receives the affirmative vote of a majority of the Directors present, except as may be otherwise provided in a written agreement among the Corporation and the stockholders of the Corporation.

Section 8.    Action by Consent.    Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if the action is taken pursuant to the terms of Section 141 of the DGCL. The action must be evidenced by one or more written consents describing the action taken, signed by each Director required to sign the consent, and included in the minutes. Action of the Board of Directors taken by consent is effective when the last Director required to sign the consent signs the consent, unless the consent specifies a prior or subsequent effective date.

Section 9.    Committees.    The Board of Directors may create one or more committees and appoint Directors to serve on them. Each committee may have one or more members, who serve at the pleasure of the Board of Directors. The creation of a committee and appointment of members to it must be approved by the greater of (i) a majority of all the Directors in office when the action is taken, or (ii) the number of Directors required under Section 7 of this Article IV to take action. All rules applicable to action by the Board of Directors apply to committees and their members. The Board of Directors may specify the authority that a committee may exercise; however, a committee may not (a) authorize distributions, except a committee may authorize or approve a reacquisition of shares if done according to a formula or method prescribed by the Board of Directors, (b) approve or propose to stockholders action that must be approved by stockholders, (c) fill vacancies on the Board of Directors or on any of its committees, (d) amend the Certificate of Incorporation, (e) adopt, amend, or repeal these Bylaws, (f) approve a plan of merger not requiring stockholder approval, or (g) authorize or approve the issuance or sale or a contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except the Board of Directors may authorize a committee to so act within limits prescribed by the Board of Directors.

Section 10.    Presence.    The Board of Directors may permit any or all Directors to participate in any annual, regular, or special meeting by any means of communication by which all Directors participating may simultaneously hear each other during the meeting. A Director so participating is deemed to be present in person at the meeting.

Section 11.    Compensation.    Each Director who shall not at the time also be an Officer or employee of the Corporation or any of its subsidiaries (hereinafter referred to as an "Outside Director"), in consideration of such person serving as a Director, shall be entitled to receive from the Corporation such fees for attendance at meetings of the Board of Directors or of committees of the Board, or both, and such other benefits or compensation, as the Board shall from time to time determine. In addition, each Director, whether or not an Outside Director, shall be entitled to receive from the Corporation reimbursement for the reasonable expenses (including travel expenses) incurred by such person in connection with the performance of such person's duties as a Director. Nothing contained in this Section 11 shall preclude any Director from serving the Corporation or any of its subsidiaries in any other capacity and receiving proper compensation therefor.

Section 12.    Indemnification.    Each Director of the Corporation shall be entitled to indemnification from the Corporation to the full extent provided by Section 145 of the DGCL.

ARTICLE V
Officers

Section 1.    Officers.    The Corporation shall have such Officers ("Officers" and each an "Officer") as are deemed appropriate by the Board of Directors, which may (but need not) consist of a President, one or more Vice Presidents, a Secretary, a Treasurer, and such assistant Officers as the Board of Directors or the President may designate. The same individual may simultaneously hold more than one office.

Section 2.    Terms of Office.    Officers are elected at each annual meeting of the Board of Directors and serve for a term expiring at the following annual meeting of the Board of Directors. An Officer who has been removed pursuant to Section 4 of this Article V ceases to serve as an Officer immediately upon removal; otherwise, an Officer whose term has expired continues to serve until a successor is elected and qualifies.

Section 3.    Vacancies.    If a vacancy occurs among the Officers, the Board of Directors may fill the vacancy. Any Officer elected to fill a vacancy holds office until the next annual meeting of the Board of Directors and until a successor is elected and qualifies.

Section 4.    Removal.    Any Officer may be removed by the Board of Directors at any time with or without cause.

Section 5.    Compensation.    Each Officer shall receive such compensation for service in office as may be fixed by the Board of Directors.

Section 6.    President.    The President is the Chief Executive Officer of the Corporation and is responsible for managing and supervising the affairs and personnel of the Corporation, subject to the general control of the Board of Directors. The President presides at all meetings of stockholders and Directors. The President, or proxies appointed by the President, may vote equity interests of other entities owned by the Corporation. The President has authority to execute, with the Secretary, powers of attorney appointing other corporations, partnerships, or individuals as the agents of the Corporation, subject to law, the Certificate of Incorporation, and these Bylaws. The President has such other powers and duties as the Board of Directors may from time to time prescribe.

Section 7.    Vice President.    The Corporation may have one or more Vice Presidents. The Vice President(s) have such powers and duties as the Board of Directors may from time to time prescribe.

Section 8.    Secretary.    The Secretary is responsible for (a) attending all meetings of the stockholders and the Board of Directors, (b) preparing true and complete minutes of the proceedings of all meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors, (c) maintaining and safeguarding the books (except books of account) and records of the Corporation, and (d) authenticating the records of the Corporation. If required, the Secretary attests the execution of deeds, leases, agreements, powers of attorney, certificates representing shares of the Corporation, and other official documents by the Corporation. The Secretary serves all notices of the

Corporation required by law, the Board of Directors, or these Bylaws. The Secretary has such other duties as the Board of Directors may from time to time prescribe.

Section 9.    Treasurer.    The Treasurer is responsible for (a) keeping correct and complete books of account which show accurately at all times the financial condition of the Corporation, (b) safeguarding all funds, notes, securities, and other valuables which may from time to time come into the possession of the Corporation, and (c) depositing all funds of the Corporation with such depositories as the Board of Directors shall designate. The Treasurer shall furnish at meetings of the Board of Directors, or when otherwise requested, a statement of the financial condition of the Corporation. The Treasurer has such other duties as the Board of Directors may from time to time prescribe.

Section 10.    Assistant Officers.    The Board of Directors or the President may from time to time designate and elect assistant Officers who shall have such powers and duties as the Officers whom they are elected to assist specify and delegate to them, and such other powers and duties as the Board of Directors or the President may from time to time prescribe. An Assistant Secretary may, during the absence or disability of the Secretary, discharge all responsibilities imposed upon the Secretary of the Corporation, including, without limitation, attest the execution of all documents by the Corporation.

Section 11.    Delegation of Duties.    In the case of the absence, disability, death, resignation or removal from office of any Officer, or for any other reason that the Board shall deem sufficient, the Board may delegate, for the time being, any or all of the powers or duties of such Officer to any other Officer or to any Director.

Section 12.    Indemnification.    Each Officer of the Corporation shall be entitled to indemnification from the Corporation to the full extent provided by Section 145 of the DGCL.

ARTICLE VI
Miscellaneous

Section 1.    Records.    The Corporation shall keep as permanent records minutes of all meetings of the stockholders, the Board of Directors, and all committees of the Board of Directors, and a record of all actions taken without a meeting by the stockholders, the Board of Directors, and all committees of the Board of Directors. The Corporation or its agent shall maintain a record of the stockholders in a form that permits preparation of a list of the names and addresses of all stockholders, in alphabetical order showing the number of shares held by each. The Corporation shall maintain its records in written form or in a form capable of conversion into written form within a reasonable time. The Corporation shall keep a copy of the following records at its principal office: (a) the Certificate of Incorporation then currently in effect, (b) the Bylaws then currently in effect, (c) minutes of all stockholder and Board of Directors (or committees thereof) meetings, and records of all actions taken by stockholders and/or the Board of Directors (or committees thereof) without a meeting, for the past three (3) years, (d) all written communications to stockholders generally during the past three (3) years, including annual financial statements furnished upon request of the stockholders, (e) a list of the names and business addresses of the current Directors and Officers, and (f) the most recent annual report filed with the Delaware Secretary of State.

Section 2.    Inspection of Records.    Any stockholder (or the stockholder's agent or attorney authorized in writing) shall be entitled to inspect and copy at such stockholder's expense, after giving the Corporation at least five (5) business days' written notice of such stockholder's demand to do so, the corporate records set forth in Article VI, Section 1, above.

Section 3.    Execution of Contracts and Other Documents.    Unless otherwise authorized or directed by the Board of Directors, all written contracts and other documents entered into by the Corporation shall be executed on behalf of the Corporation by the President or a Vice President, and, if required, attested by the Secretary or an Assistant Secretary.

Section 4.    Accounting Year.    The accounting year of the Corporation begins on January 1 of each year and ends on December 31 of such year.

Section 5.    Corporate Seal.    The Corporation has no seal.

ARTICLE VII
Amendment

        These Bylaws may be amended or repealed only by the Board of Directors or as otherwise determined pursuant to the terms of an agreement by and among the Corporation and the stockholders of the Corporation. Except as may be provided in such an agreement, the affirmative vote of a majority of all the Directors is necessary to amend or repeal these Bylaws.

Attested this 14^th day of July, 2004
/s/ SCOTT DORSEY Scott Dorsey, President

EX-4.2

Exhibit 4.2

EXACTTARGET, INC.

AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT

November 8, 2006

THIS AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of November 8, 2006, by and among EXACTTARGET, INC., a Delaware corporation (the "Corporation"), and the Stockholders identified on Annex I hereto.

PREAMBLE

        The Stockholders believe it to be in the best interest of the Corporation and the Stockholders to provide for the continued stability of the business and policies of the Corporation and its subsidiaries, as the same may exist from time to time, and, to that end, the parties hereto set forth this Agreement.

        The Company and certain of the Stockholders were parties to that certain Stockholders' Agreement, dated July 15, 2004 (the "Prior Agreement"), and the Stockholders purchasing Series D Preferred Stock desire to amend and restate the Prior Agreement to provide the Stockholders purchasing Series D Preferred Stock with the rights and privileges as set forth herein.

        ACCORDINGLY, in consideration of the mutual covenants and agreements contained in this Agreement, the receipt and sufficiency of which is are hereby acknowledged, the parties hereto agree to amend and restate the Prior Agreement in its entirety as follows:

ARTICLE I.

DEFINITIONS; RULES OF CONSTRUCTION

        The following terms have the following meanings:

        "Acceptance Notice" shall have the meaning set forth in Section 3.3(a)(ii).

        "Affiliate" means, with respect to any Person, any (a) director, officer, limited or general partner, member or stockholder holding 5% or more of the outstanding capital stock or other equity interests of such Person, (b) spouse, parent, sibling or descendant of such Person (or a spouse, parent, sibling or descendant of a Person specified in clause (a) above relating to such Person) and (c) other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term "control" includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

        "Approved Sale" shall have the meaning set forth in Section 3.6.

        "Board" means the Board of Directors of the Corporation.

        "Charter" means the Amended and Restated Certificate of Incorporation of the Corporation in effect as of the date hereof, as the same may be amended, modified or supplemented after the date hereof.

        "Common Stock" shall mean the Common Stock of the Corporation, $0.001 par value per share.

        "Common Stockholder Directors" shall have the meaning set forth in Section 2.1(b)(iii).

        "Co-Sale Notice" shall have the meaning set forth in Section 3.4(a)(i).

        "Co-Sale Offeree" shall have the meaning set forth in Section 3.4(a).

        "Co-Sale Offeror" shall have the meaning set forth in Section 3.4(a).

        "Director Indemnification Agreement" means the Director Indemnification Agreements between the Corporation and each of the directors of the Corporation, as may be amended, modified or supplemented from time to time.

        "Equity Securities" means all shares of capital stock of the Corporation, all securities convertible into or exchangeable for shares of capital stock of the Corporation, and all options, warrants, and other rights to purchase or otherwise acquire from the Corporation shares of such capital stock, including any stock appreciation or similar rights, contractual or otherwise.

        "Excluded Stock" shall have the meaning set forth in the Charter.

        "First Offer" shall have the meaning set forth in Section 3.3(a)(i).

        "First Offer Number" shall have the meaning set forth in Section 3.5(b).

        "First Offeror" shall have the meaning set forth in Section 3.3(a).

        "First Offer Period" shall have the meaning set forth in Section 3.5(a).

        "Full Allotment" shall have the meaning set forth in Section 3.3(a)(ii).

        "Group" means:

        (a)   in the case of any Stockholder who is an individual, (i) such Stockholder, (ii) the spouse or lineal descendants of such Stockholder (or any guardian, trustee or custodian for the benefit of such Persons), (iii) all trusts for the benefit of such Stockholder, (iv) all Persons principally owned by and/or organized or operating for the benefit of any of the foregoing and (v) all Affiliates of such Stockholder;

        (b)   in the case of any Stockholder that is a partnership, (i) such Stockholder, (ii) its limited, special and general partners, (iii) any Person to which such Stockholder shall Transfer all or substantially all of its assets, and (iv) all Affiliates and employees of and consultants to, such Stockholder or any of its Affiliates; and

        (c)   in the case of any Stockholder which is a corporation or a limited liability company, (i) such Stockholder, (ii) its stockholders or members as the case may be, (iii) any Person to which such Stockholder shall Transfer all or substantially all of its assets, and (iv) all Affiliates of such Stockholder.

        "Insight Directors" shall have the meaning set forth in Section 2.1(b)(i).

        "Liquidation" shall have the meaning set forth in the Charter.

        "Majority Holders" shall mean the holders of a majority of the Equity Securities of the Corporation, including the holders of a majority of the Series C Investor Shares.

        "Management Stockholder"" means Scott Dorsey, Chris Baggott and Peter McCormick.

        "Montagu Newhall" means, collectively, Montagu Newhall Global Partners II, L.P.; Montagu Newhall Global Partners II-A, L.P.; Montagu Newhall Global Partners II-B, L.P.; Montagu Newhall Global Partners III, L.P.; Montagu Newhall Global Partners III-A, L.P.; and Montagu Newhall Global Partners III-B, L.P.

        "New Securities" means all Equity Securities other than Excluded Stock and the Series D Preferred Stock issued under that certain Securities Purchase Agreement, dated as of November 8, 2006, by and among the Company and the investors party thereto.

        "Non-Competitor" means a Person that is not in the business of providing or selling any services or products which are the same as, or substantially similar to, any services or products primarily provided or sold by the Company or otherwise engaged in a business that is primarily the same as, or substantially similar to, the business of the Company.

        "Offer" shall have the meaning set forth in Section 3.5(a).

        "Offered Shares" shall have the meaning set forth in Section 3.3(a)(i).

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        "Person" shall be construed in the broadest sense and means and includes a natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and any other entity and any federal, state, municipal, foreign or other government, governmental department, commission, board, bureau, agency or instrumentality, or any private or public court or tribunal.

        "Preferred Stock" means the Series A Preferred Stock of the Corporation, par value $0.001 per share, the Series B Preferred Stock of the Corporation, par value $0.001 per share, the Series C Preferred Stock, and the Series D Preferred Stock.

        "Pro Rata Amount" means, with respect to any Stockholder, the quotient obtained by dividing (i) the number of shares of Common Stock held by such Stockholder by (ii) the aggregate number of shares of Common Stock held by all Stockholders or class of Stockholders (as applicable), assuming in each case the conversion or exchange of all securities by their terms convertible into or exchangeable for Common Stock and the exercise of all vested and "in the money" options to purchase or rights to subscribe for Common Stock (including warrants) or such convertible or exchangeable securities.

        "Purchase Notice" shall have the meaning set forth in Section 3.5(b).

        "QIPO" shall have the meaning set forth per the term "Series C QIPO" in the Chapter.

        "Registration Rights Agreement" shall have the meaning set forth in Section "Required Sale Notice" shall have the meaning set forth in Section 3.6.

        "Rights Holder" shall mean (i) each Series C Investor; (ii) each Series D Investor for so long as such Series D Investor holds at least twenty percent (20%) of the shares of Series D Preferred Stock purchased by such Series D Investor on the Series D Original Issue Date (as defined in the Charter); (iii) each Management Stockholder; and (iv) each Stockholder (other than the Series C Investors, Series D Investors and Management Stockholders) holding at least five percent (5%) of the Common Stock of the Corporation, on a fully-diluted basis (assuming exercise or conversion of all then outstanding convertible securities, options, and warrants that are then exercisable or convertible).

        "Sale of the Corporation" shall have the meaning set forth in the Charter.

        "Series A Preferred Stock" means the Series A Preferred Stock of the Corporation, par value $0.001 per share.

        "Series A/B Director" shall have the meaning set forth in Section 2.1(b)(ii).

        "Series B Preferred Stock" means the Series B Preferred Stock of the Corporation, par value $0.001 per share.

        "Series C Investors" means the Persons designated on Annex I hereto as "Series C Investors" and any Transferee of such Persons who or which agrees in writing to be treated as a Series C Investor hereunder and to be bound by the terms and comply with all applicable provisions hereof.

        "Series C Investor Nominee" shall have the meaning set forth in Section 3.6(c).

        "Series C Investor Shares" means all Equity Securities of the Corporation held at any time during the teen of this Agreement by the Series C Investors,

        "Series C Preferred Stock" means the Series C Preferred Stock of the Corporation, par value $0.001 per share.

        "Series D Investors" means the Persons designated on Annex I hereto as "Series D Investors" and any Transferee of such Persons who or which agrees in writing to be treated as a Series D Investor hereunder and to be bound by the terms and comply with all applicable provisions hereof.

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        "Series D Preferred Stock" means the Series D Preferred Stock of the Corporation, par value $0.001 per share.

        "Shares" means all Equity Securities held at any time during the term of this Agreement by any Stockholder. Any reference to a number of "Shares" shall treat each share of Preferred Stock as the number of shares of Common Stock into which it is then convertible pursuant to the Charter and any warrants or convertible securities as the number of shares of Preferred Stock or Common Stock for which it is then exercisable or convertible.

        "Stockholders" means the stockholders identified on Annex I hereto, including without limitation the holders of Common Stock, holders of Series A Preferred Stock, holders of Series B Preferred Stock, Series C Investors, Series D Investors and Management Stockholders, and includes any transferee of any such Person who or which agrees in writing to be treated as a Stockholder hereunder pursuant to Section 3.1 and to be bound by the terms and comply with all applicable provisions hereof,

        "Subsidiary" means, with respect to any Person, any other Person the majority of whose Equity Securities or voting securities are directly or indirectly owned or controlled by such Person.

        "Tag-Along-Notice" shall have the meaning set forth in Section 3.4(c).

        "Termination Date" means the earlier to occur of: (i) the closing of a QIPO and (ii) the closing of a Liquidation.

        "Third Party" means, with respect to any Stockholder, any Person that is not (i) the Corporation or (ii) a member of the Group of such Stockholder.

        "Transfer" means to sell, transfer, assign, pledge, hypothecate or otherwise dispose of Shares, either voluntarily or involuntarily and with or without consideration excluding any (i) transfers to the Corporation by employees, consultants or other service providers of the Corporation upon a termination of employment or other consulting or similar engagement or (ii) transfers to the Corporation by any Stockholders.

        "Transferee" means any Person to whom a Stockholder shall Transfer Shares.

        "Transferor" means any Person who Transfers Shares.

ARTICLE II.

BOARD REPRESENTATION

2.1Board Representation.

        (a)   The Corporation and the Stockholders shall take such corporate actions as may be required to ensure that (i) the number of directors constituting the Board is at all times five (5), and (ii) the presence of three directors (including at least one director nominated under Section 2.1(b)(i) hereof) is required to constitute a quorum of the Board.

        (b)   Subject to Section 2.1(c) below:

          (i)  Insight Venture Partners IV, L.P. and Insight Venture Partners (Cayman) IV, L.P. shall each be entitled: (A) to nominate one individual to the Board to serve as directors (collectively, the "Insight Directors") until their respective successors are elected and qualified, (B) to nominate each successor to the Insight Directors and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B);

         (ii)  the holders of a majority of Series A Preferred Stock and Series B Preferred Stock, voting together as a single class and on an as converted to Common Stock basis, shall be entitled: (A) to nominate one individual to the Board to serve as a director (the "Series A/B Director") until his or

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her successor is elected and qualified, (B) to nominate each successor to the Series A/B Director and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B);

        (iii)  the holder(s) of a majority of all shares of Common Stock shall be entitled: (A) to nominate two individual(s) to the Board to serve as directors (the "Common Stockholder Directors") until his or her successors are elected and qualified, (B) to nominate each successor to the Common Stockholder Directors, and (C) to direct the removal from the Board of any director nominated under the foregoing clauses (A) or (B); and

        (iv)  one authorized representative of Montagu Newhall shall be entitled to attend each meeting of the Board of Directors as an observer and shall be given timely notice of the Board of Directors meeting in the same manner and at the same time that the directors of the Company are given notice of such meeting; providedthat the Board of Directors, acting in the best interest of the Company or upon the advice of corporate legal counsel, may, in its sole discretion, exclude any such observer from any meeting or portion thereof (including, without limitation, in order to protect confidential information not known by the observer or to protect the attorney-client privilege). Each such observer shall receive the same written information (including, without limitation reports, financial statements and notices, but excluding any written information that may breach or waive a privilege) as is provided to the directors in connection with such meeting; provided further that each such observer shall enter into a confidentiality and non disclosure agreement acceptable to the Company if not already subject to such agreement.

        (c)   Each nomination or any proposal to remove from the Board any director shall be made by delivering to the Corporation a notice signed by the party or parties entitled to such nomination or proposal. As promptly as practicable, but in any event within ten (10) days, after delivery of such notice, the Corporation shall take or cause to be taken such corporate actions as may be reasonably required to cause the election or removal proposed in such notice. Such corporate actions may include calling a meeting or soliciting a written consent of the Board, or calling a meeting or soliciting a written consent of the Stockholders.

        (d)   The Corporation shall execute and deliver a Director Indemnification Agreement, substantially in the form of that executed and delivered in favor of the initial Insight Directors, in favor of any other Persons who shall become directors after the date hereof.

2.2Voting Agreement.

        Each Stockholder shall vote all Shares held by such Stockholder for the election to the Board of all individuals nominated in accordance with Section 2.1 and for the removal from the Board of all directors proposed to be removed in accordance with Section 2.1 and shall take all actions required on its behalf to give effect to the agreements set forth in this Section 2.2. Each Stockholder shall use all reasonable efforts to cause each director originally nominated by such Stockholder to vote for the election to the Board of all individuals nominated in accordance with Section 2.1.

2.3Interim Director.

        The Corporation shall notify each Stockholder of the occurrence of any vacancy in any seat of the Board. If the Stockholders entitled to nominate a successor to fill such vacancy fail to do so within 15 days after delivery of such notice, such vacancy may be filled in accordance with the By-laws of the Corporation until a successor has been nominated and elected to the Board in accordance with Sections 2.1 and 2.2.

2.4Committees; Subsidiaries.

        (a)   Each Stockholder shall use all reasonable efforts to cause each director of the Corporation nominated by such Stockholder to take such corporate actions as may be reasonably required to ensure

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that (i) the Board has at all times a compensation committee and an audit committee and (ii) one director nominated under Section 2.1(b)(i) shall be appointed to each such committee. The Compensation Committee shall approve all increases in executive compensation, executive bonuses and all option grants (including the vesting schedules with respect to such option grants). The Audit Committee shall approve the engagement of the Corporation's auditors and approve the audit prior to its issuance each year.

        (b)   The Corporation and each Stockholder shall take, and each Stockholder shall use all reasonable efforts to cause each director of the Corporation nominated by such Stockholder to take, such corporate actions as may be reasonably required to ensure that the composition of the board of directors of all direct and indirect Subsidiaries of the Corporation is identical to the composition of the Board.

2.5Meetings; Expenses; Compensation.

        (a)   Corporation shall convene meetings of the Board at least once every three months. Upon any failure by the Corporation to convene any meeting required by this paragraph, a director nominated under Section 2.1(b)(i) shall be empowered to convene such meeting.

        (b)   The Corporation shall reimburse each director and observer who is not an employee of the Corporation for his or her reasonable out-of-pocket expenses (including travel) incurred in connection with the attendance of meetings of the Board or any committee thereof or the performance of his or her duties.

2.6Protective Provisions.

        As long as at least twenty percent (20%) of the Series C Investor Shares outstanding as of the Original Series C Issue Date (as defined in the Charter) remain outstanding, the Corporation shall not take, nor shall it permit any of its Subsidiaries to take, after the Original Series C Issue Date, any of the following actions without the prior written approval of the holders of a majority of all outstanding Series C Investor Shares:

        (a)   (A) issue or authorize any options (other than options or other convertible securities (not to exceed 1,113,232 options or convertible securities) issued pursuant to any of the Corporation's stock incentive plans), or (B) issue or authorize any Equity Securities, warrants, or options (other than as set forth in (A) above) or other rights to purchase Equity Securities of the Corporation, or (C) issue any stock appreciation or similar rights, (D) create a bonus plan or program or issue any bonuses or agree to issue bonuses, the payment of which is contingent upon the occurrence of a Liquidation, change of control or similar event, or (E) redeem, repurchase or acquire any debt or Equity Securities (other than the Series C Investor Shares, repurchases upon termination of service or employment of consultants, directors, or employees pursuant to equity restriction agreements or the exercise by the Corporation of contractual rights of first refusal);

        (b)   take any action that could result in a Liquidation;

        (c)   effect any acquisition by the Corporation of any business (whether by purchase of stock or assets) for consideration in excess of $250,000, not included in the annual operating budget;

        (d)   incur or have outstanding any indebtedness for borrowed money in an amount greater than $250,000 in the aggregate;

        (e)   effect any changes in the Charter, By-laws, or other governing documents of the Corporation;

        (f)    effect the sale of a material part of the Corporation or effect any sales, leases, pledging or other dispositions of assets outside the ordinary course of business;

        (g)   make any material deviation from the annual operating budget and business plans approved by the Board, including at least one Insight Director;

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        (h)   make investments in any other Person;

        (i)    alter the size of the Board;

        (j)    agree to or take any action which may alter, adversely affect or amend the preferences, privileges or rights of the Series C Investor Shares or create any class of securities that is senior to or pari passu with the Series C Investor Shares;

        (k)   declare or pay any dividends (other than with respect to the Series C Investor Shares);

        (l)    grant any exclusive rights to any intellectual property of the Corporation;

        (m)  grant any exclusive distribution rights;

        (n)   make any amendment to the provisions of this Section 2.6; or

        (o)   agree to take any of the foregoing actions.

ARTICLE III.

SHARES

3.1Future Stockholders.

        The Corporation shall require each Person that acquires Equity Securities entitling them either directly or indirectly to hold more than five percent (5%) of the Common Stock of the Corporation (on a fully-diluted basis) after the date hereof, as a condition to the effectiveness of such acquisition, to execute a counterpart to this Agreement, agreeing to be treated as (a) a "Series C.Investor", if such Person acquires such Equity Securities from a Series C Investor or, subject to Section 2.2(a) hereof, acquires shares of the Corporation's authorized but unissued shares of Series C Preferred Stock (or any series thereof) directly from the Corporation (and as a "Series C Investor", such Person shall also be a "Stockholder" hereunder); or (b) a "Series D Investor", if such Person acquires such Equity Securities from a Series D Investor or, subject to Section 2.2(a) hereof, acquires shares of the Corporation's authorized but unissued shares of Series D Preferred Stock (or any series thereof) directly from the Corporation (and as a "Series D Investor", such Person shall also be a "Stockholder" hereunder); or (c) a "Stockholder", if such Person acquires Equity Securities from a Stockholder or such Person acquires Equity Securities directly from the Corporation, and such Person is not addressed by clauses (a) or (b) above, whereupon such Person shall be bound by, and entitled to the benefits of and the provisions of this Agreement relating to Series C Investors, Series D Investors, or Stockholders, as the case may be. The Stockholders (other than Series C Investors) agree to take all actions to permit the Corporation to comply with all of its obligations under all agreements with the Series C Investors (including authorization of sufficient Equity Securities to permit conversion of Series C Investor Shares in accordance with the Charter or the exercise of any warrants or other convertible securities (including convertible notes)).

3.2Limitations on Transfers.

        (a)   No Transfer of any Shares by any Stockholder shall become effective unless and until the Transferee (unless already subject to this Agreement) executes and delivers to the Corporation a counterpart to this Agreement, agreeing to be treated in the same manner as the Transferring Stockholder. Upon such Transfer and such execution and delivery, the Transferee shall be bound by, and entitled to the benefits of, this Agreement with respect to the Transferred Shares in the same manner as the transferring Stockholder. Any Transfer of Shares by any Stockholder not in accordance with this paragraph shall be void. If not otherwise a party to the Amended and Restated Registration Rights Agreement, dated as of the date hereof among the Corporation and the other parties thereto (as amended, modified or supplemented from time to time, the "Registration Rights Agreement"), each Stockholder shall comply and be bound by Section 5 of the Registration Rights Agreement.

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        (b)   No Stockholder shall be permitted to Transfer any Shares in connection with a Liquidation or participate in any transaction constituting a Liquidation unless all of the holders of Series C Investor Shares receive the appropriate amounts that they are entitled to receive pursuant to the Charter in connection with a Liquidation. In the event of a Liquidation, each Stockholder shall use his, her or its best efforts to ensure that the holders of the Series C Investor Shares receive (out of the proceeds of such Liquidation distributable to the Corporation's stockholders) the appropriate amount that they are entitled to receive pursuant to the Charter in connection with a Liquidation.

        (c)   Each Stockholder that is an entity that was formed for the sole purpose of directly or indirectly acquiring Shares or that has no substantial assets other than Shares or direct or indirect interests in Shares agrees that (i) certificates for shares of its common stock or other instruments reflecting equity interests in such entity (and the certificates for shares of common stock or other equity interests in any similar entities controlling such entity) will note the restrictions contained in this Agreement on the restrictions on transfer of shares as if such common stock or other equity interests were Shares and (ii) no shares of such common stock or other equity interests may be transferred to any person other than in accordance with the terms and provisions of this Agreement as if such common stock or other equity interests were Shares.

3.3Right of First Refusal.

        (a)   If any Stockholder (other than a holder of Series C Investor Shares that is proposing to Transfer Shares to a Non-Competitor) (the "First Offeror") proposes to Transfer any Shares to any Third Party, the First Offeror shall, before such Transfer:

          (i)  Deliver to the Corporation and the Rights Holders an offer (the "First Offer") to Transfer such Shares upon the terms set forth in this Section 3.3(a), including (A) the number of Shares to which the First Offer relates (the "Offered Shares") and the name of the First Offeror, (B) the name and address of the proposed offeree (the "First Offeree"), (C) the proposed amount and type of consideration (including, if the consideration consists in whole or in part of non-cash consideration, such information available to the First Offeror as may be reasonably necessary for the Corporation and the Rights Holders to properly analyze the economic value and investment risk of such noncash consideration) and the terms and conditions of payment offered.

         (ii)  The Rights Holders shall have the first right and option, for a period of ten (10) days after delivery of the First Offer by the First Offeror, to accept all or any portion of the Offered Shares at the purchase price and on the terms stated in the First Offer. Any Rights Holder may accept the First Offer and purchase its Pro Rata Amount (based on the number of Shares held by all Rights Holders (other than the First Offeror)) of all Offered Shares (with respect to each Rights Holder, its "Full Allotment") by delivering to the First Offeror a notice (the "Acceptance Notice") in writing within such ten day period. Each Rights Holder purchasing its Full Allotment may also accept the First Offer and purchase its Pro Rata Amount (based on the number of Shares held by all Rights Holders purchasing their Full Allotments) of any Shares not so purchased. If the Rights Holders do not elect to purchase all of the Offered Shares, the Corporation shall then have the right or option, for a period of ten (10) days after the expiration of the 10-day period above to accept in writing all or any of the Offered Shares not accepted by the Rights Holders (with respect to the Corporation, its "Full Allotment") at the purchase price and on the terms stated in the First Offer.

        (iii)  The First Offeror may Transfer any or all of the Offered Shares not purchased by the Rights Holders or the Corporation, on terms and conditions no more favorable to the First Offeree than are described in the First Offer, within 60 days after expiration of the Acceptance Period. If such Transfer is not made within such 60-day period, the restrictions provided for in this Section 3.3 shall again become effective.

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        (b)   For purposes of this Section 3.3, each Rights Holder may aggregate his, her or its Pro Rata Amount among other Rights Holders in his, her or its Group to the extent that such other Rights Holders in his, her or its Group do not elect to purchase their respective Pro Rata Amounts.

3.4Co-Sale Rights.

        (a)   If any Stockholder (the "Co-Sale Offeree") other than a Management Stockholder receives an offer to Transfer any Shares to any Third Party (the "Co-Sale Offeror"), the Co-Sale Offeree shall, at least 30 days before such Transfer:

          (i)  Deliver a notice (the "Co-Sale Notice") to the Rights Holders other than the Management Stockholders that sets forth substantially the same information as the First Offer in Section 3.3(a)(i) hereof; provided, however, that such Co-Sale Notice shall indicate that the Co-Sale Offeror has been informed of the co-sale rights provided for in this Section 3.4and has agreed to purchase Shares in accordance with the terms hereof.

         (ii)  The Co-Sale Offeree shall not Transfer any Shares to the Co-Sale Offeror unless the Rights Holders are permitted to Transfer their respective Pro Rata Amount (based upon the aggregate number of Shares of the Corporation outstanding at such time and held by all Rights Holders (other than the Co-Sale Offeror)) of the aggregate number of Shares to which the -Co-Sale Offer relates.

        (b)   The Co-Sale Offeree shall, in addition to complying with the provisions of this Section 3.4, comply with the other provisions of this Article III (it being understood that the notice contemplated by Section 3.3(a)(i) and the Co-Sale Notice contemplated by this Section 3.4 may be included in a single notice).

        (c)   Within 30 days after delivery of the Co-Sale Notice, each Rights Holder may elect to participate in the proposed Transfer by delivering to such Co-Sale Offeree a notice (the "Tag-Along Notice") specifying the number of Shares (up to his, her or its Pro Rata Amount (based upon the aggregate number of Shares of the Corporation outstanding at such time) with respect to which such Rights Holder shall exercise his, her or its rights under this Section 3.4. For purposes of this Section 3.4, each Rights Holder may aggregate his, her or its Pro Rata Amount among other Rights Holders in his, her or its Group to the extent that such other Rights Holders in his, hers or its Group do not elect to sell their respective Pro Rata Amounts.

        (d)   Any Shares requested to be included in any Co-Sale Notice shall be Transferred on at least the same terms and conditions as are set forth in the Co-Sale Notice.

        (e)   The Co-Sale rights contained in this Section 3.4 shall not apply to Transfers made to members of the Transferor's Group, provided that the Transferee agrees to be bound by the restrictions of this Agreement.

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3.5Preemptive Rights.

        (a)   If the Corporation proposes to offer New Securities to any Person, the Corporation shall, before such offer, deliver to the Rights Holders an offer (the "Offer") to issue to the Rights Holders, such New Securities upon the terms set forth in this Section 3.5. The Offer shall state that the Corporation proposes to issue New Securities and specify their number and terms (including purchase price). The Offer shall remain open and irrevocable for a period of 30 days (the "First Offer Period") from the date of its delivery.

        (b)   Each Rights Holder may accept the Offer by delivering to the Corporation a notice (the "Purchase Notice") within the First Offer Period. The Purchase Notice shall state the number (the "First Offer Number") of New Securities such Rights Holder desires to purchase. If the sum of all First Offer Numbers exceeds the number of New Securities, the New Securities shall be allocated among the Rights Holders that delivered a Purchase Notice in accordance with their respective Pro Rata Amount (based on the aggregate number of Shares of the Corporation outstanding at the time of the Offer and held by all Rights Holders).

        (c)   The issuance of New Securities to the Rights Holders who delivered a Purchase Notice shall be made on a business day, as designated by the Corporation, not less than 10 and not more than 30 days after expiration of the First Offer Period on those terms and conditions of the Offer not inconsistent with this Section 3.5.

        (d)   If the number of New Securities exceeds the sum of all First Offer Numbers, the Corporation may issue such excess or any portion thereof on the terms and conditions of the Offer to any Person within 90 days after expiration of the First Offer Period. If such issuance is not made within such 90-day period, the restrictions provided for in this Section 3.5 shall again become effective.

        (e)   For purposes of this Section 3.5, each Rights Holder may aggregate his, her or its Pro Rata Amount among other Rights Holders in his, her or its Group to the extent that other Rights Holders in his, her or its Group do not elect to purchase their respective Pro Rata Amounts.

3.6Approved Sale; Sale of the Corporation.

        (a)   At any time that the Majority Holders propose a Sale of the Corporation, such Majority Holders shall be entitled to deliver notice to the Corporation that such Majority Holders desire the Corporation and/or the Stockholders to enter into agreements with one or more Persons that would result in a Sale of the Corporation (an "Approved Sale"), whereupon all Stockholders and the Corporation shall consent to and raise no objections against the Approved Sale, and if the Approved Sale is structured as (A) a merger or consolidation of the Corporation, each Stockholder shall, and hereby agrees to, waive any dissenter's rights, appraisal rights or similar rights in connection with such merger or consolidation and instruct the Board to vote in favor of such Approved Sale, or (B) a sale of shares of capital stock, each Stockholder shall, and hereby agrees to, agree to sell their Shares on the terms and conditions approved by such Majority Holders. All Stockholders and the Corporation shall take all necessary and desirable actions in connection with the consummation of the Approved Sale, including the execution of such agreements and such instruments and other actions reasonably necessary to (1) provide the representations, warranties, indemnities, covenants, conditions, escrow agreements and other provisions and agreements relating to such Approved Sale and (2) to effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale as set forth below. The Stockholders shall not be required to comply with, and shall have no rights under, Section 3.1 through 3.5 in connection with any Approved Sale.

        (b)   The Corporation shall provide the Stockholders with written notice of any Approved Sale at least ten (10) days prior to the consummation thereof. Upon the Consummation of the Approved Sale, each Stockholder shall receive the same portion of the aggregate consideration from such Approved Sale that such Stockholder would have received if such aggregate consideration (in the case of an asset

10

sale, after payment or provision for all liabilities) has been distributed by the Corporation in a Liquidation; and

          (i)  if any Stockholders of a class of Shares are given an option as to the form and amount of consideration to be received with respect to Shares in a class, all holders of Shares of such class will be given the same option;

         (ii)  no Stockholder shall be obligated to pay more than his or its pro rata amount of reasonable expenses incurred (based on the proportion of the aggregate transaction consideration received) in connection with a consummated Approved Sale to the extent such expenses are incurred for the benefit of all Stockholders and are not otherwise paid by the Corporation or the acquiring party (expenses incurred by or on behalf of a Stockholder for its or his sole benefit not being considered expenses incurred for the benefit of all Stockholders); and

        (iii)  in the event that the Stockholders are required to provide any representations, warranties or indemnities in connection with an Approved Sale (other than representations, warranties and indemnities on a several basis concerning each Stockholder's valid ownership of his or its Shares, free of all liens and encumbrances, enforceability and each Stockholder's authority, power, and right to enter into and consummate agreements relating to such Approved Sale without violating applicable law or any other agreement), then each Stockholder shall not be liable for more than his or its pro rata amount (based on the proportion of the aggregate transaction consideration received) of any liability for misrepresentation or indemnity (except in respect of such several representations and warranties) and such liability shall not exceed the total purchase price received by such Stockholder (net of broker fees) from such purchaser for his or its Shares (including the exercise price thereof), and, to the extent that an indemnification escrow has been established, such liability shall be satisfied solely out of any funds escrowed for such purpose prior to recourse against such Stockholder.

        (c)   Each Stockholder and the Corporation hereby grants an irrevocable proxy and power of attorney to any nominee of the majority of all the outstanding Series C Investor Shares (which nominee may be a Series C Investor) (the "Series C Investor Nominee") to take all necessary actions and execute and deliver all documents deemed necessary and appropriate by such Person to effectuate the consummation of any Approved Sale. The Stockholders hereby indemnify, defend and hold the Series C Investor Nominee harmless (severally in accordance with their pro rata share of the consideration received in any such Approved Sale (and not jointly and severally)) against all liability, loss or damage, together with all reasonable costs and expenses (including reasonable legal fees and expenses), relating to or arising from its exercise of the proxy and power of attorney granted hereby.

ARTICLE IV.

MISCELLANEOUS

4.1Termination.

        This Agreement shall automatically terminate and be of no further force or effect as of the Termination Date.

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4.2Legend on Stock Certificates.

        Each certificate representing shares of capital stock that are subject to this Agreement shall bear a legend substantially in the following form:

"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO A STOCKHOLDERS' AGREEMENT DATED NOVEMBER 8, 2006 AMONG EXACTTARGET, INC. AND CERTAIN HOLDERS OF ITS OUTSTANDING CAPITAL STOCK, AS AMENDED FROM TIME TO TIME. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF EXACTTARGET, INC."

4.3Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.

        Other than with respect to matters relating to the internal governance of the Corporation, this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of New York to be applied. All matters which are the subject of this Agreement relating to matters of internal governance of the Corporation shall be governed and construed in accordance with the laws of the State of Delaware, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of Delaware to be applied.

        ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.

        EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

4.4Severability.

        It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without

12

invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

4.5Assignments; Successors and Assigns.

        Except in connection with any Transfer of Shares in accordance with this Agreement, the rights of each party under this Agreement may not be assigned. This Agreement shall bind and inure to the benefit of the parties and their respective successors, permitted assigns, legal representatives and heirs.

4.6Amendments; Waivers.

        This Agreement may only be modified or amended by an instrument in writing signed by (i) the Corporation, (ii) the holders of at least a majority of the outstanding Series C Investor Shares and (iii) the holders of at least a majority of the Shares held by Stockholders other than the Series C Investors (voting together as a single class). Any waiver of any provision of this Agreement requested by any party hereto must be granted in advance, in writing by the party granting such waiver. The holders of a majority of all then outstanding Series C Investor Shares may grant a waiver or effect any modification or amendment on behalf of all holders of Series C Investor Shares and the holders of a majority of all then outstanding Shares (other than the Series C Investor Shares) may grant a waiver or effect any modification or amendment on behalf of all Stockholders (other than the Series C Investors). Any amendment and restatement of this Agreement made in accordance with this Section 4.6 shall be deemed adopted by, binding upon, and enforceable against each and every Stockholder, regardless of whether the Corporation obtains each such Stockholder's signature to an amended and restated agreement.

4.7Notices.

        All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopy, nationally- recognized overnight courier or first class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties:

          (i)  if to the Corporation, to:

ExactTarget, Inc.
20 N. Meridian Street, Suite 200
Indianapolis, IN 46204
Telephone: (317) 275-5440
Facsimile: (317) 275-5440
Attention: Scott Dorsey

with a copy to:

Ice Miller
One American Square
P.O. Box 82001
Indianapolis, IN 46282
Telephone: (317) 236-2394
Attention: Steven K. Humke

         (ii)  if to the Stockholders, to their respective addresses set forth on Annex Ihereto:

with a copy, in the case of the Series C Investors, to:

O'MELVENY & MYERS LLP
Times Square Tower

13

7 Times Square
New York, New York 10036
Telephone: 212-326-2000
Facsimile: 212-326-2061
Attn: Ilan S. Nissan, Esq.

and, with a copy, in the case of the Series D Investors, to:

DLA Piper US LLP
6225 Smith Avenue
Baltimore MD 21209-3600
Telephone: (410) 580-4264
Attention: Wil Sirota

        All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of dispatch by nationally-recognized overnight courier, on the next business day following such dispatch and (c) in the case of mailing, on the third business day after the posting thereof.

4.8Headings.

        The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

4.9Nouns and Pronouns.

        Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of names and pronouns shall include the plural and vice versa.

4.10Entire Agreement.

        This Agreement contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings with respect to such subject matter, The parties hereto represent and warrant that there are no other agreements or understandings regarding any of the subject matter hereof other than as set forth herein and covenant not to enter into any such agreements or understandings after the date hereof except pursuant to an amendment, modification or waiver of the provisions of this Agreement.

4.11Counterparts.

        This Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

4.12Voting on "As Converted" Basis.

        Any provision hereof that entitles any holders of shares of Preferred Stock to consent or vote upon any matter, or take any action, based upon an "as converted" or similar basis shall be determined without giving effect to any conversion in respect of accrued and unpaid dividends thereon.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned parties have executed this Amended and Restated Stockholders' Agreement to be effective as of the date first written above.

"COMPANY"
EXACTTARGET, INC.
By:	/s/ Scott Dorsey

Name:	Scott Dorsey
Title:	CEO

Counterpart Signature Page to Amended and Restated Stockholders' Agreement

"SERIES D INVESTORS"
MONTAGU NEWHALL GLOBAL PARTNERS II, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/ Jim Lim

	Name:	Jim Lim
	Title:	Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS II-A, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/ Jim Lim
	Name:	Jim Lim
	Title:	Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS II-B, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/ Jim Lim
	Name:	Jim Lim
	Title:	Managing Member

Counterpart Signature Page to Amended and Restated Stockholders' Agreement

MONTAGU NEWHALL GLOBAL PARTNERS III, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
	By:	Montagu Newhall Global Partners, III, L.L.C., its General partner
By:	/s/ Jim Lim
	Name:	Jim Lim
	Title:	Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS III-A, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
	By:	Montagu Newhall Global Partners, III, L.L.C., its General partner
By:	/s/ Jim Lim
	Name:	Jim Lim
	Title:	Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS III-B, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
	By:	Montagu Newhall Global Partners, III, L.L.C., its General partner
By:	/s/ Jim Lim
	Name:	Jim Lim
	Title:	Managing Member

Counterpart Signature Page to Amended and Restated Stockholders' Agreement

"SERIES C INVESTORS":
INSIGHT VENTURE PARTNERS IV, L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/ Jeff Horing
	Name:	Jeff Horing
	Title:
INSIGHT VENTURE PARTNERS (CAYMAN) IV, L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/ Jeff Horing
	Name:	Jeff Horing
	Title:
INSIGHT VENTURE PARTNERS IV (CO-INVESTORS), L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/ Jeff Horing
	Name:	Jeff Horing
	Title:
INSIGHT VENTURE PARTNERS IV (FUND B), L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/ Jeff Horing
	Name:	Jeff Horing
	Title:

Counterpart Signature Page to Amended and Restated Stockholders' Agreement

MEMPHIS BAY POINT PARTNERS
By:	/s/ E. Lee Giovanetti
	Name:	E. Lee Giovanetti
	Title:	Managing Partner
REBECCA W. WILSON
/s/ Rebecca W. Wilson Rebecca W. Wilson
D. CANALE & COMPANY
By:	/s/ Michael A. Robinson
	Name:	Michael A. Robinson
	Title:	President

Counterpart Signature Page to Amended and Restated Stockholders' Agreement

Annex I

STOCKHOLDERS

"SERIES C INVESTORS";

INSIGHT VENTURE PARTNERS IV, L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS
(CAYMAN) IV, L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS IV
(CO-INVESTORS), L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS IV
(FUND B), L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

"SERIES D INVESTORS":

Montagu Newhall Global Partners II, L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Montagu Newhall Global Partners II-A,L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Montagu Newhall Global Partners II-B, L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Montagu Newhall Global Partners III, L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Montagu Newhall Global Partners 111-A, L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Montagu Newhall Global Partners III-B, L.P.
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
Attn: Matt Buckley

Memphis Bay Point Partners
6075 Poplar Avenue, Suite 700
Memphis, TN 38119
Attn: Lee Giovannetti

Rebecca W. Wilson
4863 River Garden Cove
Memphis, TN 38119

D. Canale & Company
c/o Mr. Mike Robinson
39 South Main Street, Suite 2099
Memphis, TN 38102

OTHER STOCKHOLDERS:

Scott Dorsey
6405 Landborough N. Dr.
Indianapolis, TN 46220

Christopher Baggott
2720 E. Fairway Village Drive
Greenfield, IN 46140

Peter McCormick
426 Park Avenue
Mahtomedi, MN 55155

Robert A. Compton
2847 Keasler Circle West
Germantown, TN 38139

William K. Boncosky
5245 N. New Jersey Street
Indianapolis, IN 46220

William A, Boncosky
3585 Bay Road North Drive
Indianapolis, IN 46240

Thomas Burns
2654 Fairway Village Dr.
Greenfield, IN 46140

Kurt M. Vetters
903 Fairway Village Blvd.
Greenfield, IN 46140

Nicholas L. Tuttle c/o Techniks, Inc.
9930 56th Street
Indianapolis, IN 46236

John Michael Irons
2802 W. 96th Street
Indianapolis, IN 46268

Dr. James T. Anderson
1302 Bittersweet Drive
Greenfield, IN 46140

Brian F. Cooke
8888 Keystone Crossing Suite 200
Indianapolis, IN 46240

Skip O'Neill
1650 N.W. 9151 Place
Portland, OR 97229

Eric Mahlum
17794 NW Solano Ct.
Portland, OR 97229

Donald A. Dorsey
42029 N. Astoria Way
Anthem, AZ 85086

Robert J. Thomas
5495 Ridgewood Cove
Minnetrista, MN 55364

Mark Dinwiddie
1002 E. 81st Street
Indianapolis, IN 46240

Douglas W. Cline
306 Abbedale Ct.
Carmel, IN 46032

Benjamin W. Timby
c/o WebExcellence
7042 Thousand Oaks Lane
Indianapolis, IN 46214

John H. Hurley
c/o WebExcellence
13833 Mill Stream Ct.
Carmel, IN 46032

Todd Dorsey
4212 Honeysuckle Lane
Zionsville, IN 46077

Sean G. Ryan
1392 Madison Court
Mt. Pleasant, SC 29466

Jim Cloutier
13629 46'h St. NE
St. Michael, MN 55376

David A. Boncosky
8001 N. Illinois
Indianapolis, IN 46260

Mark Goble
c/o Goble and Associates
One East Wacker Drive
Chicago, IL 60601

Scott S. McCorkle
10078 Bent Tree Lane
Fishers, IN 46038

Darrell Wayne Poole
6862 Clubside Drive
Loveland, OH 45140

EX-10.1

Exhibit 10.1

EXACTTARGET, INC. 2004 STOCK OPTION PLAN

        ExactTarget, Inc. ("Company") hereby establishes the ExactTarget, Inc. 2004 Stock Option Plan ("Plan"), effective July 14, 2004.

ARTICLE 1.
GENERAL PROVISIONS

        Section 1.01.    Approval and Application.    This Plan was approved by the Company's Board of Directors by unanimous written consent, contingent on approval by the Company's shareholders within 12 months following its adoption by the Board. It was approved by the requisite percentage of the Company's shareholders by written consent within such 12-month period. This Plan, in addition to governing Stock Options granted hereunder, shall govern all options granted to employees of the Company's predecessor, ExactTarget, LLC, that became options of the Company on July 14, 2004 (which options account for 2,444,392 of the aggregate number of Common Shares with respect to which Stock Options may be granted hereunder, as specified in Section 5.01 hereof), and revised option agreements reflecting this fact shall be entered into between the grantees of those prior options and the Company.

        Section 1.02.    Description.    The Plan is designed to promote the interests of the Company and its shareholders by providing a means by which the Board can award stock options to designated employees and directors of the Company or any Subsidiary. The Plan permits the Board to grant Incentive Stock Options and Non-Qualified Stock Options as provided herein.

        Section 1.03.    Purpose.    The purpose of the Plan is to further the growth, development, and financial success of the Company by providing for stock-based incentives intended to (i) attract and retain key employees and directors, (ii) motivate those employees and directors to use their best efforts on behalf of the Company, and (iii) more closely align the interests of those employees and directors with those of the Company's shareholders.

ARTICLE 2.
DEFINITIONS AND RULES OF CONSTRUCTION

        Section 2.01.    Definitions.    Whenever used herein, capitalized terms shall have the meanings indicated below:

        (a)   "Agreement" means an agreement between an Optionee and the Company setting out the terms of a Stock Option award.

        (b)   "Board" or "Board of Directors" means the Company's Board of Directors, as constituted from time to time.

        (c)   "Cause" means, with respect to an Optionee, that the Board has made a good faith determination that one or more of the following has occurred: (i) the Optionee's material breach of the terms of his employment (continuing for 10 days after receipt of written notice of the need to cure); (ii) the Optionee's gross negligence or willful misconduct in the performance or intentional non-performance (continuing for 10 days after receipt of written notice of the need to cure) of any of the material duties under the Optionee's employment agreement; (iii) the Optionee's dishonesty, fraud, or misconduct with respect to the business or affairs of the Employer (monetarily or otherwise); (iv) the Optionee's conviction of (or entry of a plea of nolo condentere with respect to) a felony or a lesser crime involving moral turpitude; or (v) the Optionee's chronic alcohol abuse or illegal drug abuse that is determined by the Board following a reasonable investigation to materially impair the Optionee's ability to perform his duties and responsibilities.

        (d)   "Code" means the Internal Revenue Code of 1986, as amended from time to time.

        (e)   "Committee" means the compensation committee of the Board; provided, however, during any period in which there is not a properly constituted compensation committee, the term "Committee" means the Board.

        (f)    "Common Share" means a share of the Company's common stock.

        (g)   "Company" means ExactTarget, Inc.

        (h)   "Director" means a director of the Company or a Subsidiary who is not also an Employee.

        (i)    "Disability" means, with respect to an Optionee, the Optionee's inability due to physical or mental illness or injury to carry out effectively his duties and obligations to the Employer or to participate effectively and actively in the management of the Employer for a period of at least six consecutive months, as determined in the reasonable judgment of the Board.

        (j)    "Employee" means any individual employed by the Employer as a common law employee, including an officer or employee who is also a member of the Board of Directors or the board of directors of a Subsidiary.

        (k)   "Employer" means the Company and/or any Subsidiary.

        (l)    "Exercise Price" means the purchase price established by the Committee for exercising a Stock Option. With respect to a Prior Option, the Exercise Price is the purchase price resulting from the conversion of units in the Predecessor Employer to Common Shares.

        (m)  "Fair Market Value" means, with respect to a Common Share as of a particular date, the value of a Common Share as determined by the Committee on a basis consistent with applicable regulations under the Code.

        (n)   "Grant Date" means the effective date of the grant of a Stock Option. With respect to a Prior Option, the Grant Date is the effective date of the grant of the Prior Option.

        (o)   "Incentive Stock Option" means a stock option that satisfies the requirements of Code Section 422.

        (p)   "Non-Qualified Stock Option" means a stock option that does not satisfy the requirements of Code Section 422.

        (q)   "Optionee" means an Employee or Director to whom a Stock Option has been granted; provided, however, an Optionee shall cease to be such at such time as all Options granted to him have expired or been exercised or forfeited.

        (r)   "Plan" means the Exact Target, Inc. 2004 Stock Option Plan, as set forth in this document, as amended from time to time.

        (s)   "Predecessor Employer" means ExactTarget, LLC.

        (t)    "Prior Option" means an option granted by the Predecessor Employer that became an option for Common Shares on July 14, 2004.

        (u)   "Retirement" means, in the case of an Employee, Termination of Service for any reason other than Disability or death on or after the day on which the Employee has both completed 10 years of employment with the Company and reached age 60.

        (v)   "Securities Act" means the Securities Act of 1933, as amended from time to time.

        (w)  "Stock Option" means an Incentive Stock Option or Non-Qualified Stock Option granted pursuant to the Plan or an option issued by the Predecessor Employer that is governed by the Plan.

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        (x)   "Subsidiary" means any company (other than the Company) that is a subsidiary within the meaning of Code Section 424.

        (y)   "10% Shareholder" means an individual who owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or Subsidiary.

        (z)   "Terminates Service", "Termination of Service" or "Service is Terminated" means, (i) in the case of an Employee, a complete termination of the employment relationship between the Employee and the Employer and, (ii) in the case of a Director, termination of service as a Director.

        Section 2.02.    Rules of Construction.    The following rules shall apply in construing the Plan and any Agreement:

        (a)   Words used in the masculine gender shall be construed to include the feminine gender, where appropriate, and words used in the singular or plural shall be construed as being in the plural or singular, where appropriate.

        (b)   The Plan and any Agreement shall be construed, enforced, and administered and the validity thereof determined in accordance with the laws of the State of Indiana without regard to conflict of law principles.

        (c)   Provisions of the Plan applicable to Incentive Stock Options shall be construed to effect compliance with Code Section 422.

        (d)   Headings are used for convenience only, and they shall not affect the construction of this Plan or any Agreement.

        (e)   If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of the Plan shall continue in effect, provided that the essential economic terms of the Plan and any Agreement can still be enforced.

        (f)    Reference to any provision of the Code or other law shall be deemed to include a reference to the successor of such provision.

ARTICLE 3.
ADMINISTRATION

        Section 3.01.    Committee.    The Plan shall be administered by the Committee. Any action of the Committee with respect to the administration of the Plan shall be taken by a majority vote or written consent. No member of the Committee shall participate in the grant of a Stock Option to himself; provided, however, a Committee member may participate in the decision to grant Stock Options for the same number of Common Shares to all similarly situated Directors.

        Section 3.02.    Powers of the Committee.    Subject to the express provisions of the Plan and any express limitations on its delegated authority, the Committee is authorized and empowered to (i) designate those persons eligible to receive Stock Options, (ii) grant Stock Options, (iii) determine the Grant Date of each Stock Option grant, the number of Common Shares subject to the grant, and the other terms and conditions of the grant, which terms and conditions need not be the same for each grant, (iv) interpret the Plan, (v) determine the Fair Market Value of the Common Shares, (vi) accelerate the time during which a Stock Option may be exercised, notwithstanding any provisions of an Agreement to the contrary, (vii) prescribe, amend, and rescind rules relating to the Plan, (viii) authorize any person to execute on behalf of the Company any instrument required to effectuate a grant, (ix) determine the rights and obligations of Optionees under the Plan, (x) determine the terms

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and provisions of each Agreement under the Plan (which Agreements need not be identical), including the designation of those Stock Options intended to be Incentive Stock Options, (xi) revise the Exercise Price, or otherwise amend or modify the terms, of any existing Stock Options with the consent of the Optionee, and (xii) make all other determinations deemed necessary or advisable for the administration of the Plan.

        Section 3.03.    Binding Determinations.    Any action taken by, or inaction of, the Company, the Board, or the Committee relating or pursuant to the Plan (including, without limitation, any determination of Fair Market Value) shall be within the sole discretion of that entity or body and shall be conclusive and binding on all persons. Subject only to compliance with the express provisions hereof, the Board and the Committee may act in their sole discretion on all matters within their authority relating to the Plan.

        Section 3.04.    Delegation.    The Committee may delegate ministerial non-discretionary functions to one or more Company officers or employees.

        Section 3.05.    Limitation of Liability.    No director, officer, or agent of the Company shall be liable for any act, omission, or decision under the Plan that is taken, made, or omitted in good faith.

ARTICLE 4.
ELIGIBILITY

        The Committee shall, from time to time, designate those persons eligible to receive Stock Option grants from among key Employees and Directors; provided, however, Incentive Stock Options may be granted only to Employees. The Committee may make more than one grant to any person.

ARTICLE 5.
COMMON SHARES SUBJECT TO AWARDS

        Section 5.01.    Shares Available.    The only shares subject to Stock Options shall be the Company's authorized, but unissued, or reacquired Common Shares. The aggregate number of Common Shares with respect to which Stock Options may be granted, including Prior Options, is 3,557,624. If a Stock Option under the Plan expires, or for any reason is terminated or unexercised with respect to any Common Shares, such Common Shares shall again be available for Stock Options thereafter granted hereunder during the term of the Plan. The limitations of this Section are subject to adjustment as provided in Section 5.02.

        Section 5.02.    Adjustments Upon Recapitalization or Reorganization.    If the outstanding Common Shares are changed into, or exchanged for, a different number or kind of shares or securities of the Company through any capital reorganization or reclassification, or if the number of outstanding Common Shares is changed through a stock split or stock dividend, an appropriate adjustment shall be made by the Committee in the number of, kind of, and/or Exercise Price for Common Shares with respect to which Stock Options may be granted. A corresponding adjustment shall likewise be made in the number of, kind of, and/or Exercise Price for Common Shares with respect to which there are unexercised outstanding Stock Options. Any such adjustment in an outstanding Stock Option, however, shall be made without change in the total price applicable to the unexercised portion of the Stock Option but with a corresponding adjustment in the price for each Common Share covered by the Stock Option. In making such adjustments, or in determining that no such adjustments are necessary, the Committee may rely upon the advice of counsel and accountants for the Company, and the good faith determination of the Committee shall be final, conclusive, and binding. No fractional shares of stock shall be issued or issuable under the Plan on account of any such adjustment.

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        Section 5.03.    Restrictions Applicable to Common Shares.    Common Shares issued pursuant to the exercise of a Stock Option shall be subject to the restrictions referred to in the Agreement as well as any shareholder's agreement generally in effect at the time of exercise. Each Optionee shall be required to execute and deliver to the Company a counterpart signature page to any shareholder agreement providing for restrictions on transfer or voting of the Company's Common Shares, in effect at the time of exercise, as a condition of the Optionee's exercise of a Stock Option.

ARTICLE 6.
STOCK OPTION TERMS AND CONDITIONS

        Section 6.01.    Types of Stock Options.    Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options, as the Committee designates at the time of grant. The Committee may grant Stock Options at different times to the same person or grant different Stock Options at the same time to the same person. All Prior Options have been converted into Non-Qualified Stock Options.

        Section 6.02.    Terms and Conditions.    All Stock Options shall be evidenced by a Stock Option Agreement, which shall contain such terms and be in such form as the Committee shall from time to time approve, subject to the following conditions and limitations:

        (a)    Grant Date and Type of Option.    Unless otherwise specifically provided by the Plan or indicated by the Committee, each Stock Option shall be granted as of the date of the Committee's resolution granting the Stock Option. The Agreement shall state the Grant Date and whether the Stock Option is an Incentive Stock Option or Non-Qualified Stock Option.

        (b)    Number of Common Shares.    The Agreement shall state the number of Common Shares subject to Options.

        (c)    Exercise Price.    The Agreement shall state the Exercise Price per Common Share. The Exercise Price shall be determined by the Committee; provided, however, for Incentive Stock Options, the Exercise Price shall satisfy the requirements of Section 6.03 and the provisions of Code Section 422.

        (d)    Vesting of Awards.    The Agreement shall provide a vesting schedule for the Stock Options subject thereto. In the absence of a vesting schedule in the Agreement, the following schedule shall apply: (i) 25% of the Common Shares subject to a Stock Option shall become vested on the first anniversary of the Grant Date, provided that a Termination of Service has not occurred before that date, and (ii) following the first anniversary of the Grant Date, ¹/48 of the Common Shares subject to a Stock Option shall become vested following each month of employment thereafter, provided that a Termination of Service has not occurred before each applicable date. Notwithstanding the preceding provisions, the Board of Directors shall have plenary authority, in its sole discretion, but subject to the express provisions of the Plan, to accelerate the time at which all or any part of an option may be exercised; provided that, so long as Insight Venture Partners, LLC or any of its affiliates has at least one representative on the Board of Directors, that representative must approve any such acceleration.

        (e)    Limitation on Transferability.    No Stock Option shall be assignable or transferable except by will or under the laws of descent and distribution. During the lifetime of an Optionee, a Stock Option shall be exercisable only by the Optionee. Any attempt of assignment, transfer, pledge, hypothecation, or other disposition of any Stock Option granted hereunder that is contrary to the provisions of the Plan, or the levy of any attachment or similar proceedings upon any Stock Option, shall be null and void. The Common Shares issuable upon exercise of a Stock Option shall be subject to any shareholder's agreement by and among the Company and the shareholders of the

5

Company which is in existence at the time of exercise and the Optionee shall be required to execute and become a party to any such agreement as a condition of his or her exercise of the Stock Option.

        (f)    Exercise and Payment of Exercise Price.    A vested Stock Option may be exercised by the Optionee at any time after it becomes vested and before its forfeiture or expiration. An Optionee may exercise an exercisable Stock Option only by giving written notice to the Company's Treasurer (or in case of a notice by the Treasurer, to the Company's President) specifying the number of Common Shares to be purchased and accompanied by payment of the full Exercise Price therefor in cash, by check, or in such other form of lawful consideration as the Committee may approve, including without limitation and in the sole discretion of the Committee, the surrender by the Optionee of Common Shares subject to a vested exercisable Stock Option, or the transfer by the Optionee to the Company of outstanding Common Shares held by the Optionee in a manner that satisfies the requirements of the Plan and the Agreement. Common Shares used to satisfy the Exercise Price of an Option shall be valued at their Fair Market Value on the date of exercise. Stock Options unable to be exercised in compliance with the provisions of this Plan shall be canceled and the Common Shares subject to such Stock Options shall return to the Plan and be available for reissuance. The Optionee shall be required to execute and become a party to any shareholder's agreement by and among the Company and the shareholders of the Company which is in existence at the time of exercise as a condition of his or her exercise of the Stock Option.

        (g)    Restrictions on Grants.    Notwithstanding any other provision of this Plan or an Agreement, no Stock Option may be granted pursuant to the Plan later than July 14, 2014.

        (h)    Issuance of Shares and Compliance with Securities Laws.    The Company's Common Shares have not been registered under the Securities Act. The Company may postpone the issuance and delivery of certificates representing Common Shares until, in the opinion of the Company's legal counsel, the requirements for issuance in the absence of a registration statement have been satisfied. Any person purchasing Common Shares pursuant to the Plan may be required to make such representations and furnish such information as may, in the opinion of counsel for the Company, be appropriate to permit the Company to issue the shares in compliance with applicable federal and state securities laws. The certificates representing the Common Shares issued upon the exercise of a Stock Option shall contain such legends as the Committee deems necessary to comply with applicable securities laws. Until a stock certificate is actually issued, the person exercising the Stock Option shall not be deemed a shareholder of the Common Shares purchased pursuant to the Stock Option.

        (i)    Dissolution or Liquidation of the Company.    In the event of the proposed dissolution or liquidation of the Company, or in the event of a proposed sale of substantially all of the assets of the Company, each Stock Option granted under the Plan shall terminate as of a date to be fixed by the Board of Directors; provided, however, that no fewer than 30 days written notice of the date so fixed shall be given to each holder of Stock Options, and each holder of Stock Options shall have the right during the period of 30 days preceding such termination to exercise his Stock Options as to all or any part of the Common Shares covered thereby.

        Section 6.03.    Additional Limitations Applicable to Incentive Stock Options.

        (a)    General.    The limitations and conditions of this Section as well as the terms and conditions otherwise specified by the Plan and Agreement shall apply to any Incentive Stock Option.

        (b)    Exercise Price.    The Exercise Price of an Incentive Stock Option shall be an amount per share not less than the Fair Market Value of a Common Share on the grant date. In the case of Incentive Stock Options granted to an Employee who is a 10% shareholder, the Exercise Price

6

shall be an amount per share that is not less than 110% of the Fair Market Value of a Common Share on the grant date.

        (c)    Exercise Period.    Unless terminated earlier pursuant to other terms and provisions of the Plan or the Agreement, the term of each Incentive Stock Option shall expire not more than five years from the date on which the Incentive Stock Option is granted, if the Participant is a 10% Shareholder, and not more than 10 years from the date on which the Incentive Stock Option is granted, if the Participant is not a 10% Shareholder.

        (d)    Maximum Exercise Rule.    The aggregate Fair Market Value (determined at the time the Stock Option is granted) of the Common Shares with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year under this Plan and any other incentive stock option plan (within the meaning of Code Section 422) of the Company or any parent or subsidiary corporation of the Company shall not exceed $100,000. To the extent that the grant of a Stock Option would cause the limitations of this Subsection to be exceeded, the Stock Option shall be treated as a Non-Qualified Stock Option.

        (e)    Other Code Limits.    Incentive Stock Options may be granted only to Employees who satisfy the other eligibility requirements of the Code. There shall be imposed in any Agreement relating to Incentive Stock Options such other terms and conditions as from time to time are required for the Stock Option be an "incentive stock option" within the meaning of Code Section 422.

ARTICLE 7.
TAX WITHHOLDING

        Section 7.01.    Withholding Arrangements.    All Optionees shall make arrangements satisfactory to the Committee to pay to the Company at the time of exercise any federal, state, or local taxes required to be withheld with respect to the exercise. If an Optionee fails to make such tax payments as required, the Company and any Subsidiary shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Optionee.

        Section 7.02.    Retention and/or Delivery of Common Shares.    With respect to Common Shares purchased pursuant to a Non-Qualified Stock Option, the Committee may, at its discretion and subject to such rules as it may adopt, permit the Optionee to elect to satisfy, in whole or in part, any withholding tax obligation that may arise in connection with the exercise of the option by having the Company retain Common Shares or accept delivery from the Optionee of Common Shares having a Fair Market Value equal to the amount of the withholding tax to be satisfied by such retention or delivery. With respect to any Common Shares purchased pursuant to an Incentive Stock Option, the Committee may, at its discretion and subject to such rules as it may adopt, permit the Optionee to elect to satisfy, in whole or in part, any withholding tax obligation that may arise in connection with the disqualifying disposition of such Common Shares under Code Section 422(a)(1) by having the Company accept delivery from the Optionee of Common Shares having a Fair Market Value equal to the amount of the withholding tax to be satisfied by such delivery.

ARTICLE 8.
TERMINATION OF EMPLOYMENT

        Section 8.01.    Termination for Cause.    If an Optionee has a Termination of Service for Cause, all of the Optionee's outstanding Stock Options as of the date of termination shall be forfeited immediately, and the Optionee shall have no further rights under the Plan.

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        Section 8.02.    Termination for Reason Other Than Cause, Retirement, Disability, or Death.    If an Optionee has a Termination of Service for any reason other than Cause or the Optionee's Retirement, Disability, or death, the Optionee may, but only within the one-month period immediately following such Termination of Service and in no event later than the expiration date specified in the Agreement, exercise any outstanding Stock Option to the extent that it was vested and exercisable on the date of such termination.

        Section 8.03.    Retirement.    If an Optionee has a Termination of Service due to Retirement, the Optionee may, but only within the three-month period immediately following such Termination of Service and in no event later than the expiration date specified in the Agreement, exercise any outstanding Stock Option to the extent that it was vested and exercisable on the date of his Retirement.

        Section 8.04.    Disability.    If an Optionee has a Termination of Service due to Disability, the Optionee may, but only within the three-month period immediately following such Termination of Service and in no event later than the expiration date specified in the Agreement, exercise any outstanding Stock Option to the extent that it was vested and exercisable on the date of his Termination of Service.

        Section 8.05.    Death.    If an Optionee has a Termination of Service due to death, the person or persons to whom the Optionee's rights to Stock Options have passed by will or the applicable laws of descent and distribution may, but only within the three-month period immediately following the Optionee's death and in no event later than the expiration date specified in the Agreement, exercise any outstanding Stock Option to the extent that it was vested and exercisable on the date of the Optionee's death.

ARTICLE 9.
AMENDMENT AND TERMINATION OF PLAN

        Section 9.01.    Cancellation of Stock Options.    The Committee may cancel any outstanding, unexercised Stock Option, provided that the Optionee to whom such Stock Option was granted has given his written consent thereto.

        Section 9.02.    Amendment or Termination of Plan.    The Committee may amend or terminate the Plan and may thereupon change terms and conditions, in accordance with such amendments, of any Stock Options not theretofore issued, and, with the consent of the Optionee, of any previously issued but unexercised and outstanding Stock Options. Notwithstanding the preceding provisions, no amendment, without the approval of the Company's shareholders, may (i) increase the number of Common Shares with respect to which Stock Options and/or Incentive Stock Options may be issued, (ii) modify the provisions of Section 6.03, (iii) extend the term of the Plan or any Stock Option, or (iv) modify (within the meaning of Code Section 424) any Incentive Stock Option.

ARTICLE 10.
MISCELLANEOUS

        Section 10.01.    Notices.    Except as specifically set forth in this Plan, all notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered in person or sent by registered or certified mail, postage prepaid.

        Section 10.02.    No Employment Rights.    Nothing contained in the Plan or any Agreement shall confer on the Optionee any right to continued employment by the Employer or limit in any way the right of the Employer to terminate his employment, with or without cause, at any time.

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        Section 10.03.    No Rights as Shareholder.    No Optionee shall have any rights as a Shareholder on account of a Stock Option until the exercise of the Stock Option and the full payment of the Purchase Price.

        Section 10.04.    Successor.    This Plan and the obligations hereunder shall be binding on any successor of the Company.

        Section 10.05.    Effective Date and Term of the Plan.    The Plan shall become effective as of July 14, 2004, and it shall terminate on July 14, 2014. Termination of the Plan shall not affect Stock Options granted before the date of termination, but no Stock Options may be granted pursuant to the Plan after that date.

[Signature Page Follows]

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        The undersigned duly authorized officer of ExactTarget, Inc. affirms that the ExactTarget, Inc. 2004 Stock Option Plan, in the form set out above, has been adopted by the Company, effective July 14, 2004.

EXACTTARGET, INC.
By:	/s/  SCOTT DORSEY Scott Dorsey, President

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EX-10.2

Exhibit 10.2

Form of
Stock Option Agreement

        This Stock Option Agreement ("Agreement") is entered into by and between ExactTarget, Inc., a Delaware corporation ("Company") and EMPLOYEE NAME ("Optionee"). This Agreement is entered into pursuant to Section 6.02 of the ExactTarget, Inc. 2004 Stock Option Plan effective as of July 15, 2004 (the "Plan") and is subject to the Plan. All capitalized terms not defined in this Agreement shall have the definition provided in the Plan.

WHEREAS, the Company's Board of Directors adopted the Plan effective as of July 15, 2004; and

WHEREAS, in connection with and consideration for Optionee's employment with the Company, the Board of Directors desires to grant to Optionee an option to purchase shares of the Company's Common Shares ("Shares") pursuant to the terms and conditions of the Plan and this Agreement;

NOW THEREFORE, Company and Optionee hereby agree as follows:

1.

Grant of Option. Company hereby grants to Optionee an option (the "Option") to purchase up to # OF OPTIONS Shares (the "Option Shares"), upon the terms and conditions set forth below. The date of grant of the Option is EFFECTIVE DATE (the "Grant Date").

The Option granted under this Agreement is a nonqualified option as described in the regulations under Section 83 of the Internal Revenue Code of 1986, as amended (the "Code"), with the transfer of the Option Units upon exercise of the Option being governed by Code Section 83 and the regulations thereunder. The effect of the grant and exercise of the Option, as well as the sale or other disposition of any Option Units acquired upon the exercise of the Option in whole or in part, for federal, state and local income tax purposes, shall be Optionee's responsibility.

2.

Vesting of Option. Beginning on the Grant Date, the Option to buy Option Shares shall vest over a four (4) year period as follows:

(a)

25% of the Common Shares subject to a Stock Option shall become vested on the first anniversary of the Grant Date, provided that a Termination of Service has not occurred before that date; and

(b)

Following the first anniversary of the Grant Date, ¹/48 of the Option Shares shall become vested following each month of employment thereafter, provided that a Termination of Service has not occurred before each applicable date.

3.

Exercise Price. The exercise price for each Share subject to the Option shall be $4.00 per Share (the "Option Price").

4.

Non-Transferability. Neither the Option nor any portion thereof shall be transferred, sold, pledged, assigned, hypothecated, or disposed of in any manner by Optionee other than by will or the laws of descent and distribution to the extent hereinafter set forth. The Option may be exercised during the Optionee's lifetime only by the Optionee or, upon the Optionee's legal incapacity to act on his/her own behalf, by the Optionee's conservator or other lawful representative. The Option shall be null and void and without effect upon any attempted assignment or transfer, except as hereinabove provided, including without limitation, any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option.

5.

Method of Exercise and Payment. Any Option may be exercised from time to time, in whole or in part, to the extent exercisable, only by giving written notice (the "Exercise Notice") to the Treasurer of the Company at the offices of the Company, of the election to exercise the Option and the total number of Option Shares to be purchased, and shall be signed by the person

exercising the Option. Such notice shall be accompanied by payment of the full Option Price. Payment for the Option Units purchased pursuant to any exercise shall be made in full at the time of such exercise in cash or by check payable to the order of the Company.

6.

Securities Laws Restrictions and Other Restrictions on Transfer of Option Units. You represent that when you exercise your Option you shall be purchasing Option Units for your own account and not on behalf of others. You understand and acknowledge that federal and state securities laws govern and restrict your right to offer, sell or otherwise dispose of any Option Units unless your offer, sale or other disposition thereof is registered under the Securities Act and state securities laws, or in the opinion of the Company's counsel, such offer, sale or other disposition is exempt from registration or qualification thereunder. You agree that you shall not offer, sell or otherwise dispose of any Option Units in any manner which would: (a) require the Company to file any registration statement with the Securities and Exchange Commission (or any similar filing under state law) or to amend or supplement any such filing or (b) violate or cause the Company to violate the Securities Act, the rules and regulations promulgated thereunder or any other state or federal law. Optionee shall hold Company and its officers, managers, and controlling persons (as defined in the 1933 Securities Act), and any persons affiliated with any of them or with the issuance of the Option and the Option Shares subject to this Agreement, harmless from all expenses, liabilities and damages (including reasonable attorneys' fees) deriving from a disposition of the Option or Option Shares subject to this Agreement in a manner in violation of the 1933 Securities Act, or of any applicable state securities law, or which may be suffered by any such person by reason of any breach of any of the representations contained herein.

7.

Dissolution or Liquidation of the Company. In the event of the proposed dissolution or liquidation of the Company, or in the event of a proposed sale of substantially all of the assets of the Company, the Options shall terminate as of a date to be fixed by the Board of Directors; provided, however, that no fewer than 30 days written notice of the date so fixed shall be given to you, and you shall have the right during the period of 30 days preceding such termination to exercise your Option as to all or any part of the Option Shares.

8.

No Agreement of Employment. Neither the grant of the Option nor this Agreement shall be deemed to create any agreement with, or obligation by, Company to employ Optionee for any period of time, it being understood that Optionee's employment with the Company is strictly "at will" and Optionee's service may be terminated by the Company at any time, with or without cause.

9.

Severability. If any condition, term or provision of this Agreement is determined by a court to be illegal or in conflict with any law, State or Federal, the validity of the remaining portions or provisions shall not be affected, and the rights and obligations of the parties shall be construed and enforced as if this Agreement did not contain the particular condition, terms or provisions determined to be unenforceable.

10.

Entire Agreement; Governing Law. This Agreement contains the entire understanding and agreement between the parties hereto respecting the within subject matter, and there are no representations, agreements, arrangements or understandings, oral or written, between the parties hereto relating to the subject matter of this Agreement that are not fully expressed herein. This Agreement shall be governed by and construed in accordance with the laws and the State of Indiana.

11.

Notices. All notices, requests and other communications hereunder shall be in writing and, if given by telegram, telecopy or telex, shall be deemed to have been validly served, given or delivered when sent; if given by personal delivery, shall be deemed to have been validly served, given or delivered upon actual delivery; and, if mailed, shall be deemed to have been validly served, given or delivered three business days after deposit in the United States mail, as required or certified mail, with proper postage prepaid and addressed to the party or parties to be notified, at the following addresses (or such other address(es) as a party may designate for itself by like notice):

If to the Company:	ExactTarget Inc. 20 N. Meridian St., Suite 200 Indianapolis, IN 46204 Attn: Tara Masten
With a copy to:	Steven K. Humke Ice Miller One American Square Box 82001 Indianapolis, Indiana 46282-0002
If to Optionee:	To the address indicated below.

12.

Amendment. This Agreement may not be modified, amended, or waived in any manner except by an instrument in writing signed by both parties to this Agreement.

        WITNESS the signature of its duly authorized officer of the Company as of the date of grant hereof.

EXACTTARGET, INC.
By:	Traci Dolan, Vice President of Finance & Administration

OPTIONEE

Signed:

Printed:
EMPLOYEE NAME

Address:

Address:

Social Security No.:

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT

        THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the "Agreement") is effective as of November 8, 2006 by and among EXACTTARGET, INC., a Delaware corporation (the "Corporation"), and the Investors listed on Annex I attached hereto and made a part hereof (the "Investors").

R E C I T A L S

WHEREAS, certain Investors are purchasing shares of the Corporation's Series D Preferred Stock, $0.001 par value per share (the "Series D Preferred Stock"), pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of the date hereof, and such purchase is conditioned on the execution of this Agreement; and

WHEREAS, the Company, the Investors that were a party to that certain Registration Rights Agreement, dated July 15, 2004 (the "Prior Agreement"), and the Investors purchasing Series D Preferred Stock desire to amend and restate the Prior Agreement to provide the Investors purchasing Series D Preferred Stock with the rights and privileges as set forth herein;

NOW, THEREFORE, in consideration of the premises which are incorporated into and made a part of this Agreement, and of the mutual representations, warranties, covenants, agreements and conditions set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree to amend and restate the Prior Agreement in its entirety as follows:

AGREEMENT

        Section 1.    Definitions.

        As used in this Agreement, the following terms shall have the following meanings:

        "Affiliate" means, with respect to any Person, any (a) director, officer, limited or general partner, member or stockholder holding 5% or more of the outstanding capital stock or other equity interests of such Person, (b) any spouse, parent, sibling or descendant of such Person (or a spouse, parent, sibling or descendant of a Person specified in clause (a) above relating to such Person) and (c) other Person that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term "control" includes, without limitation, the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

        "Board" means the Board of Directors of the Corporation.

        "Commission" means the Securities and Exchange Commission or any other agency at the time administering the Securities Act.

        "Common Stock" means the common stock, $0.001 par value per share, of the Corporation.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time.

        "Group" has the meaning ascribed to such term in the Stockholders' Agreement, dated as of the date hereof among the Corporation and the stockholders party thereto, as amended.

        "IPO" means the Corporation's initial registration of shares of its Common Stock pursuant to a registration statement filed under the Securities Act.

        "Investors" means the holders of Restricted Shares identified on Annex I hereto and includes any successor to, or assignee or transferee of, any such Person who or which agrees in writing to be treated as an Investor hereunder and to be bound by the terms and comply with all applicable provisions hereof.

        "Other Shares" means at any time those shares of Common Stock which do not constitute Primary Shares or Registrable Shares hereunder.

        "Person" shall be construed in the broadest sense and means and includes a natural person, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and any other entity and any federal, state, municipal, foreign or other government, governmental department, commission, board, bureau, agency or instrumentality, or any private or public court or tribunal.

        "Preferred Stock" means the Series A Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock.

        "Primary Shares" means at any time authorized but unissued shares of Common Stock.

        "Prior Agreement" has the meaning set forth in the Recitals.

        "Registrable Shares" means the shares of Common Stock held by the Investors which constitute Restricted Shares.

        "Registration Date" means the date upon which the registration statement pursuant to an IPO shall have been declared effective.

        "Restricted Shares" means shares of Common Stock held by any Investor and any other securities which by their terms are exercisable or exchangeable for or convertible into Common Stock which are held by such Investor (including exercised or uncxercised warrants for Preferred Stock or Common Stock or convertible debt securities). As to any particular Restricted Shares, once issued, such Restricted Shares shall cease to be Restricted Shares when (i) they have been registered under the Securities Act, the registration statement in connection therewith has been declared effective and they have been disposed of pursuant to such effective registration statement, (ii) they are eligible to be sold or distributed pursuant to Rule 144 (including, without limitation, Rule 144(k)) in a single transaction by any Investor without limitation, or (iii) they shall have ceased to be outstanding.

        "Rule 144" means Rule 144 promulgated under the Securities Act, as such Rule may be amended from time to time, or any successor rule thereto or any complementary rule thereto (such as Rule 144A).

        "Securities Act" means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

        "Series A Preferred Stock" means the Series A Preferred Stock of the Corporation, $.001 par value per share.

        "Series B Preferred Stock" means the Series B Preferred Stock of the Corporation, $.001 par value per share.

        "Series C Holders" means those persons holding Series C Preferred Stock.

        "Series C Preferred Stock" means the Series C Preferred Stock of the Corporation, $.001 par value per share.

        "Series D Preferred Stock" means the Series D Preferred Stock of the Corporation, $.001 par value per share.

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        Section 2.    Required Registration.

        (a)   At any time following the earlier to occur of (i) three years following the date hereof or (ii) six months following the effective date of the Corporation's IPO, if holders of at least 25% of the Registrable Shares then outstanding and held by the Series C Holders request that the Corporation effect the registration of such Registrable Shares under the Securities Act, the Corporation shall promptly use its best efforts to effect the registration under the Securities Act of such Registrable Shares.

        (b)   Notwithstanding anything contained in this Section 2 to the contrary, the Corporation shall not be obligated to effect any registration under the Securities Act except in accordance with the following provisions:

        (i)    The Corporation shall not be obligated to file and cause to become effective more than one registration statement initiated pursuant to Section 2(a) above on Form S-1 promulgated under the Securities Act (or any successor form thereto).

        (ii)   The Corporation may delay the filing or effectiveness of any registration statement for a period of up to 180 days after the date of a request for registration pursuant to Section 2(a) if at the time of such request the Board determines in good faith that such registration and offering would be seriously detrimental to the Corporation, and the Chief Executive Officer of the Corporation provides a signed certificate to such effect; provided, however, that the Corporation shall only be entitled to invoke its rights under this Section 2(b)(ii) one time during any eighteen (18) month period.

        (iii)  With respect to any registration pursuant to this Section 2 the Corporation shall give notice of such registration to the Investors who do not request registration hereunder and the Corporation may include in such registration any Primary Shares or Other Shares; provided, however, that if the managing underwriter advises the Corporation that the inclusion of all Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration would interfere with the successful marketing (including pricing) of the Registrable Shares proposed to be included in such registration, then the number of Registrable Shares, Primary Shares and/or Other Shares proposed to be included in such registration shall be included in the following order:

        (A)  first, the Registrable Shares held by the Series C Holders, as determined on a pro rata basis (based upon the respective holdings of Registrable Shares by such Series C Holders); and

        (B)  second, the Registrable Shares held by the holders of Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock, as determined on a pro rata basis (based upon the respective holdings of Registrable Shares by such holders of Series A Preferred Stock, Series B Preferred Stock and Series D Preferred Stock); and

        (C)  third, the Primary Shares; and

        (D)  fourth, the Other Shares.

        (iv)  If the holders of the Registrable Shares requesting to be included in a registration pursuant to Section 2(a) so elect, the offering of such Registrable Shares pursuant to such registration shall be in the form of an underwritten offering. The holders of Registrable Shares requesting such registration shall select one or more nationally recognized firms of investment bankers reasonably acceptable to the Corporation to act as the lead managing underwriter or underwriters in connection with such offering.

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        (v)   At any time before the registration statement covering such Registrable Shares becomes effective, holders of at least 25% of the Registrable Securities then outstanding initiating the request for the registration statement may request the Corporation to withdraw or not to file the registration statement. In that event, unless such request of withdrawal was caused by, or made in response to, a material adverse effect or a similar event related to the business, properties, condition, or operations of the Corporation not known (without imputing the knowledge of any other Person to such holders) by the holders initiating such request at the time their request was made, or other material facts not known to such holders at the time their request was made, the holders shall be deemed to have used one of their registration rights under Section 2(a).

        Section 3.    Piggyback Registration.

        If the Corporation at any time proposes for any reason to register Primary Shares or Other Shares under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act (or any successor forms thereto)), it shall give written notice to the Investors of its intention to so register such Primary Shares or Other Shares at least 30 days before the initial filing of the registration statement related thereto and, upon the request of the Investors, delivered to the Corporation within 20 days after delivery of any such notice by the Corporation, to include in such registration Registrable Shares (which request shall specify the number of Registrable Shares proposed to be included in such registration), the Corporation shall use its best efforts to cause all such Registrable Shares to be included in such registration on the same terms and conditions as the securities otherwise being sold in such registration; provided, however, that if the managing underwriter advises the Corporation that the inclusion of all Registrable Shares requested to be included in such registration would interfere with the successful marketing (including pricing) of the Primary Shares or Other Shares proposed to be registered by the Corporation, then the number of Primary Shares, Registrable Shares and Other Shares proposed to be included in such registration shall be included in the order set forth in Section 2(b)(iii); provided further, that for an offering other than an IPO, the shares of Series C Preferred Stock may not be limited to less than twenty-five percent (25%) of the total offering.

        Section 4.    Registrations on Form S-3.

        Anything contained in Section 2 to the contrary notwithstanding, at such time as the Corporation shall have qualified for the use of Form S-3 promulgated under the Securities Act or any successor form thereto, the Series C Holders shall have the right to request two registrations of their Registrable Shares on Form S-3 (which may, at such holders' request, be shelf registrations pursuant to Rule 415 promulgated under the Securities Act) or its successor form, which request or requests shall (i) specify the number of such Registrable Shares intended to be sold or disposed of and the holders thereof, (ii) state whether the intended method of disposition of such Registrable Shares is an underwritten offering or a shelf registration and (iii) relate to Registrable Shares having an aggregate offering price of at least $1,000,000. A requested registration on Form S-3 (or its successor form) in compliance with this Section 4 shall not count as a registration statement initiated pursuant to Section 2(a), but shall otherwise be treated as a registration initiated pursuant to Section 2(b) (including Section 2(b)(iii)).

        Section 5.    Holdback Agreement.

        In connection with the IPO, each Investor agrees that he, she or it, shall not sell publicly, make any short sale of, or otherwise dispose publicly of, any Restricted Shares (other than sales or dispositions to members of his, her or its Group and other than with respect to those shares of Common Stock included in such registration) without the prior written consent of the Corporation, for a period (the "Lockup Period"") designated by the Corporation in writing to the Investors, which period shall begin not more than 2 days prior to the Registration Date and shall not last more than 180 days after the Registration Date; provided, however, that (i) all executive officers, directors and holders of one percent (1%) or more of the fully diluted capital stock of the Company must agree to a Lockup

4

Period of at least the same duration and on substantially similar terms, and (ii) all parties subject to a Lockup Period shall only be released early from their obligations thereunder on a pro rata basis.

        Section 6.    Preparation and Filing.

        If and whenever the Corporation is under an obligation pursuant to the provisions of this Agreement to effect the registration of any Registrable Shares, the Corporation shall, as expeditiously as practicable:

        (a)   use its best efforts to cause a registration statement that registers such Registrable Shares to become and remain effective until all of such Registrable Shares have been disposed of;

        (b)   furnish, at least five business days before filing a registration statement that registers such Registrable Shares, a prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to one counsel selected by the holders of a majority of the Series C Preferred Stock requesting such registration (the "Investors' Counsel"), together with copies of all such documents proposed to be filed (it being understood that such five-business-day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to the Investors' Counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances);

        (c)   prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective until all of such Registrable Shares have been disposed of and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Shares;

        (d)   notify in writing the Investors' Counsel (i) of the receipt by the Corporation of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any. amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Corporation of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (iii) of the receipt by the Corporation of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes;

        (e)   use its best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as the holders of Registrable Shares reasonably request and do any and all other acts and things which may be reasonably necessary or advisable to enable the Investors to consummate the disposition in such jurisdictions of the Registrable Shares owned by the Investors; provided, however, that the Corporation will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required to do so but for this paragraph (e);

        (f)    furnish to the Investors such number of copies of a summary prospectus, if any, or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Investors may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares;

        (g)   without limiting, and subject to, subsection (e) above, use its best efforts to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Corporation to

5

enable the Investors holding such Registrable Shares to consummate the disposition of such Registrable Shares;

        (h)   notify the Investors holding such Registrable Shares on a timely basis at any time when a prospectus relating to such Registrable Shares or any document related thereto includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of the Investors prepare and furnish to such Investors a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

        (i)    make available upon reasonable notice and during normal business hours, for inspection by the Investors holding such Registrable Shares, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by the Investors or underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent documents and properties of the Corporation (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Corporation's officers, directors and employees to supply all information (together with the Records, the "Information") reasonably requested by any such Inspector in connection with such registration statement. Any of the Information which the Corporation determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a material misstatement or omission in the registration statement, (ii) the release of such Information is ordered pursuant to a subpoena or other order from a court or governmental agency or authority of competent jurisdiction, (iii) such Information has been made generally available to the public through no breach of the nondisclosure obligations of the Inspectors or their Affiliates or (iv) such disclosure is required to be made under applicable law;

        (j)    use its best efforts to obtain from its independent certified public accountants "cold comfort" letters in customary form and at customary times and covering matters of the type customarily covered by cold comfort letters;

        (k)   use its best efforts to obtain from its counsel an opinion or opinions in customary form;

        (l)    provide a transfer agent and registrar (which may be the same entity and which may be the Corporation) for such Registrable Shares;

        (m)  promptly issue to any underwriter to which the Investors holding such Registrable Shares may sell shares in such offering certificates evidencing such Registrable Shares;

        (n)   list such Registrable Shares on any national securities exchange on which any shares of the Common Stock are listed or, if the Common Stock is not listed on a national securities exchange, use its best efforts to qualify such Registrable Shares for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. (the "NASD"), or such other national securities exchange as a majority of the Series C Holders shall reasonably request;

        (o)   otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, earnings statements covering a period of 12 months beginning within three months after the effective date of the subject registration statement; and

        (p)   otherwise use its best efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby.

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        Each holder of the Registrable Shares, upon receipt of any notice from the Corporation of any event of the kind described in Section 6(h) hereof, shall forthwith discontinue disposition of the Registrable Shares pursuant to the registration statement covering such Registrable Shares until such holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 6(h) hereof, and, if so directed by the Corporation, such holder shall deliver to the Corporation all copies, other than permanent file copies then in such holder's possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice.

        Section 7.    Expenses.

        All expenses incurred by the Corporation and the Investors in complying with their obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Shares, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), fees and expenses of complying with securities and blue sky laws, printing expenses, fees and expenses of the Corporation's counsel and accountants and reasonable fees and expenses of the Investors' Counsel shall be paid by the Corporation; provided, however, that all underwriting fees, discounts, selling commissions and allowances applicable to the Registrable Shares and Other Shares shall be borne by the holders selling such Registrable Shares and Other Shares, in proportion to the number of Registrable Shares and Other Shares sold by each such holder.

        Section 8.    Indemnification.

        (a)   In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Corporation shall indemnify and hold harmless the holders of Registrable Shares, each of such holder's officers, directors, employees, members, partners, and advisors and their respective Affiliates, each underwriter, broker or any other person acting on behalf of the holders of Registrable Shares and each other Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act against any losses, claims, damages, liabilities, or actions joint or several (or actions in respect thereof), to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or allegedly untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or, with respect to any prospectus, necessary to make the statements therein in light of the circumstances under which they were made not misleading, or any violation by the Corporation of the Securities Act or state securities or blue sky laws applicable to the Corporation or relating to action or inaction required of the Corporation in connection with such registration or qualification under such state securities or blue sky laws; and shall reimburse such Persons for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Corporation shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action (including any legal or other expenses incurred) arises out of or is based upon an untrue statement or allegedly untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Corporation by the holders of Registrable Shares specifically for use in the preparation thereof; provided further, however, that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any untrue statement, allegedly untrue statement, omission or alleged omission made in any preliminary prospectus but eliminated

7

or remedied in the final prospectus, such indemnity agreement shall not inure to the benefit of any of such Persons if a copy of such final prospectus had been made available to such Persons and such final prospectus was not delivered to the purchaser of the Registrable Shares with or prior to the written confirmation of the sale of such Registrable Shares.

        (b)   In connection with any registration of Registrable Shares under the Securities Act pursuant to this Agreement, each holder of Registrable Shares shall severally (based on the percentage of all Registrable, Primary and Other Shares included in such registration that were owned by such holder) and not jointly and severally indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 8(a)) the Corporation, each director of the Corporation, each officer of the Corporation who shall sign such registration statement, each' underwriter, broker or other person acting on behalf of the holders of Registrable Shares and each person who controls any of the foregoing persons within the meaning of the Securities Act with respect to any statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Corporation or such underwriter by such holder of Registrable Shares specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided, however, that the maximum amount of liability in respect of such indemnification shall be limited, in the case of each holder of Registrable Shares, to an amount equal to the net proceeds actually received by such holder from the sale of Registrable Shares effected pursuant to such registration.

        (c)   Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section 8, such indemnified party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action. The failure of any indemnified party to notify an indemnifying party of any such action shall not (unless such failure shall have a material adverse effect on the indemnifying party) relieve the indemnifying party from any liability in respect of such action that it may have to such indemnified party hereunder. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided hereunder, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party (but shall have the right to participate therein with counsel of its choice) and such indemnifying party shall reimburse such indemnified party and any Person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided hereunder. If the indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel with respect to such claim.

        (d)   If the indemnification provided for hereunder is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action

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referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage, liability or action as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant hereto were determined by pro rata allocation or by any other method or allocation which does not take account of the equitable considerations referred to herein. No person guilty or liable of fraudulent misrepresentation shall be entitled to contribution from any person.

        Section 9.    Information by Holder.

        The Investors shall furnish to the Corporation such written information regarding the Investors and the distribution proposed by any Investors as the Corporation may reasonably request in writing and as shall be reasonably required in connection with any registration referred to in this Agreement.

        Section 10.    Exchange Act Compliance.

        From the Registration Date or such earlier date as a registration statement filed by the Corporation pursuant to the Exchange Act relating to any class of the Corporation's securities shall have become effective, the Corporation shall comply with all of the reporting requirements of the Exchange Act applicable to it and shall comply with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144. The Corporation shall cooperate with the Investors in supplying such information as may be necessary for the Investors to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144.

        Section 11.    No Conflict of Rights; Future Rights.

        The Corporation shall not, after the date hereof, grant any registration rights which conflict with or impair the rights granted to the Investors hereby. If at any time following the date hereof, the Corporation shall grant to any present or future stockholder of the Corporation rights to in any manner cause or participate in any registration statement of the Corporation that, in the judgment of the Investors, are superior to or conflict with the rights granted to the Investors hereby, such grant shall be null, void and ultra vires.

        Section 12.    Termination.

        The rights contained herein shall terminate upon the earlier to occur of (i) five (5) years after the IPO, or (ii) such date as a holder of Registrable Securities may dispose of all of his, her or its Registrable Securities under rule 144(k) of the Securities Act within a ninety (90) day period.

        Section 13.    Benefits of Agreement; Third Party Beneficiaries.

        Except as provided herein, this Agreement shall bind and inure to the benefit of the Corporation, the Investors and subject to Section 14, the respective successors and assigns of the Corporation and the Investors, The managing underwriter(s) of the IPO are intended third party beneficiaries of the agreements of the Investors contained in Section 5.

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        Section 14.    Assignment.

        Each Investor may assign its rights hereunder to any purchaser or transferee of Registrable Shares; provided, however, that such purchaser or transferee shall, as a condition to the effectiveness of such assignment, be required to execute a counterpart to this Agreement agreeing to be treated as an Investor whereupon such purchaser or transferee shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement as if such purchaser or transferee was originally included in the definition of an Investor herein and had originally been a party hereto. The Corporation may not assign any rights hereunder without the consent of the Investors.

        Section 15.    Entire Agreement.

        This Agreement, and the other writings referred to herein or delivered pursuant hereto, contain the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or understandings with respect thereto.

        Section 16.    Notices.

        All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or sent by telecopy, nationally-recognized overnight courier or first-class registered or certified mail, return receipt requested, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by such party to the -other parties:

(i)	if to the Corporation, to: 20 N. Meridian, Suite 200 Indianapolis, IN 46204 Telephone: (317) 275-5440 Facsimile: (317) 275-5440 Attention: Scott Dorsey
with a copy to:
	Ice Miller One American Square P.O. Box 82001 Indianapolis, IN 46282 Telephone: (317) 236-2394 Attention: Steven K. Humke
(ii)	if to the Investors, to their respective addresses set forth on Annex I hereto.

        All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of dispatch by nationally-recognized overnight courier, on the next business day following such dispatch and (c) in the case of mailing, on the third business day after the posting thereof.

        Section 17.    Modifications; Amendments; Waivers.

        The terms and provisions of this Agreement may not be modified or amended except pursuant to a writing signed by the Corporation, Investors holding at least a majority of all Registrable Securities and the Series C Holders holding a majority of the Registrable Shares held by all Series C Holders. Any waiver of any provision of this Agreement requested by any party hereto must be granted in advance, in writing by the party granting such waiver. Any amendment and restatement of this Agreement made in accordance with this Section 17 shall be deemed adopted by, binding upon, and

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enforceable against each and every Investor, regardless of whether the Corporation obtains each such Investor's signature to an amended and restated agreement.

        Section 18.    Voting on "As Converted" Basis.

        Any provision hereof that entitles any holders of shares of Preferred Stock to consent or vote upon any matter, or take any action, based upon an "as converted to Common Stock" or similar basis shall be determined without giving effect to any conversion in respect of accrued and unpaid dividends thereon.

        Section 19.    Counterparts; Facsimile Signatures.

        This Agreement may be executed in any number of original or facsimile counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.

        Section 20.    Headings.

        The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement.

        Section 21.    Governing Law; Consent to Jurisdiction and Venue; Waiver of Jury Trial.

        This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any law or rule that would cause the laws of any jurisdiction other than the State of New York to be applied.

ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING. EACH OF THE PARTIES IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

        Section 22.    Severability.

        It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the undersigned parties have executed this Amended and Restated Registration Rights Agreement to be effective as of the date first written above.

"COMPANY":
EXACTTARGET, INC.
By:	/s/  SCOTT DORSEY Scott Dorsey, CEO

Counterpart Signature Page to Amended and Resignation Rights Agreement

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"SERIES C HOLDERS":
INSIGHT VENTURE PARTNERS IV, L.P.
By:	Insight Venture Associates IV, L.L.C. its General Partner
By:	/s/  JEFF HORING Name: Jeff Horing Title:
INSIGHT VENTURE PARTNERS (CAYMAN) IV, L.P.
By:	Insight Venture Associates IV, L.L.C. its Investment General Partner
By:	/s/  JEFF HORING Name: Jeff Horing Title:
INSIGHT VENTURE PARTNERS IV (CO-INVESTORS), L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/  JEFF HORING Name: Jeff Horing Title:
INSIGHT VENTURE PARTNERS IV (FUND B), L.P.
By:	Insight Venture Associates IV, L.L.C., its General Partner
By:	/s/  JEFF HORING Name: Jeff Horing Title:

13

"SERIES D HOLDERS": MONTAGU NEWHALL GLOBAL PARTNERS II, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/  JIM LIM Jim Lim, Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS II-A, L.P.
By: Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/  JIM LIM Jim Lim, Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS II-B, L.P.
By:	Montagu Newhall Global Partners II, L.P., its General Partner
By:	/s/  JIM LIM Jim Lim, Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS III, L.P.
By:	Montagu Newhall Global Partners III, L.P., its General Partner
By:	Montagu Newhall Global Partners III, L.L.C., its General Partner
By:	/s/  JIM LIM Jim Lim, Managing Member

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MONTAGU NEWHALL GLOBAL PARTNERS III-A, L.P.
By:	Montagu Newhall Global Partners III, L.P., its General Partner
	By:	Montagu Newhall Global Partners III, L.L.C., its General Partner
By:	/s/  JIM LIM Jim Lim, Managing Member
MONTAGU NEWHALL GLOBAL PARTNERS III-B, L.P.
By:	Montagu Newhall Global Partners III, L.P., its General Partner
	By:	Montagu Newhall Global Partners III, L.L.C., its General Partner

By:
/s/  JIM LIM Jim Lim, Managing Member

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MEMPHIS BAY POINT PARTNERS
By:	/s/  E. LEE GIOVANNETTI
	Name:	E. Lee Giovannetti
	Title:	Managing Partner
REBECCA W. WILSON
/s/  REBECCA W. WILSON Rebecca W. Wilson
D. CANALE & COMPANY
By:	/s/  MICHAEL A. ROBINSON
	Name:	Michael A. Robinson
	Title	President

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Annex I

INVESTORS

INSIGHT VENTURE PARTNERS IV, L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS
(CAYMAN) IV, L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS IV
(CO-INVESTORS), L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

INSIGHT VENTURE PARTNERS IV
(FUND B), L.P.
680 Fifth Avenue
New York, New York 10019
Telephone: 212-230-9200
Facsimile: 212-230-9272
Attn: Scott Maxwell

in each case, with a copy to:

O'MELVENY & MYERS LLP
Times Square Tower
7 Times Square
New York, New York 10036
Telephone: 212-326-2000
Facsimile: 212-326-2061
Attn: Ilan S. Nissan, Esq.

ROBERT A. COMPTON
2847 Keasler Circle W.
Germantown, TN 38139

IRONS FAMILY LIMITED PARTNERSHIP
c/o J. Kevin Irons D.M.D.
4002 Kaywood Court
Bee Cave, Texas 78738

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JOE KUCHTA
c/o Goble and Associates
800 S. Wells #200
Chicago, IL 60607

MARK GOBLE
c/o Goble and Associates
800 S. Wells #200
Chicago, IL 60607

JOHN MICHAEL IRONS
2802 W. 96^th Street
Indianapolis, IN 46268

SCOTT S. McCORKLE
10078 Bent Tree Lane
Fishers, IN 46038

MICHAEL J. ROBBINS
11342 St. Andrews Lane
Carmel, IN 46032

DAVID W. KNALL
One American Square #2600
Indianapolis, IN 46282

THOMAS J. BUCK
510 E. 96th Street
Suite 500
Indianapolis, IN 46240

BRIAN F. COOKE
8888 Keystone Crossing
Suite 200
Indianapolis, IN 46240

MARK DINWIDDIE
1002 E. 81^st Street
Indianapolis, IN 46240

WILLIAM A. BONCOSKY
3585 Bay Road North Drive
Indianapolis, IN 46240

SKIP O'NEILL
383 Winterthur Way
Highlands Ranch, CO 80129

SAM B. SUTPHIN
3603 E. Raymond Street
Indianapolis, IN 46203

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MONTAGU NEWHALL ASSOCIATES, INC.
(c/o Montagu Newhall Global Partners II, L.P.; Montagu Newhall Global Partners II-A,L.P.;
Montagu Newhall Global Partners II-B, L.P.; Montagu Newhall Global Partners III, L.P.;
Montagu Newhall Global Partners III-A, L.P.; and Montagu Newhall Global Partners III-B, L.P.)
100 Painters Mill Road, Suite 700
Owings Mills, MD 21117
United States
Telephone: 410-363-2725
Facsimile: 410-363-9075
Attn: Matt Buckley

in each case, with a copy to:

DLA PIPER US LLP
6225 Smith Avenue
Baltimore MD 21209-3600
Telephone: 410-580-4225
Facsimile: 410-580-3225
Attn: George Nemphos, Esq.

MEMPHIS BAY POINT PARTNERS
6075 Poplar Avenue, Suite 700
Memphis, TN 38119
Attn: Lee Giovannetti

REBECCA W. WILSON
4863 River Garden Cove
Memphis, TN 38119

D. CANALE & COMPANY
c/o Mr. Mike Robinson
39 South Main Street, Suite 2099
Memphis, TN 38102

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EX-10.5

Exhibit 10.5

EXECUTION COPY

FORM OF
DIRECTOR INDEMNIFICATION AGREEMENT

THIS DIRECTOR AND INDEMNIFICATION AGREEMENT (this "Agreement") is made as of this 15th day of July 2004, by and between ExactTarget, Inc., a Delaware corporation (the "Company") and                        (the "Indemnitee").

WHEREAS, it is essential to the Company that it be able to retain and attract as directors the most capable persons available;

WHEREAS, increased corporate litigation has subjected directors to litigation risks and expenses, and the limitations on the availability of director liability insurance have made it increasingly difficult for the Company to attract and retain such persons;

WHEREAS, the Company's governing documents require it to indemnify its directors to the fullest extent permitted by law and permit it to make other indemnification arrangements and agreements; and

WHEREAS, the Company desires to provide the Indemnitee with specific contractual assurance of Indemnitee's rights to full indemnification against litigation risks and expenses (regardless of any amendment to or revocation of the Company's bylaws or any change in the ownership of the Company or the composition of its Board of Directors).

NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

1.     Definitions.

        (a)   "Corporate Status" describes the status of a person who is serving or has served (i) as a director of the Company, (ii) in any capacity with respect to any employee benefit plan of the Company or (iii) as a director of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section 1(a), a director of the Company who is serving or has served as a director of a Subsidiary shall be deemed to be serving as the request of the Company.

        (b)   "Entity" shall mean any corporation, partnership, limited liability company, joint venture, company, foundation, association, organization or other legal entity.

        (c)   "Expenses" shall mean all fees, costs and expenses incurred in connection with any Proceeding, including, without limitation, attorneys' fees, disbursements and retainers (including, without limitation, any fees, disbursements and retainers incurred by Indemnitee pursuant to Section 10 of this Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services and other disbursements and expenses, and, in the case of each of the foregoing, to the extent such fees, costs and expenses are reasonable.

        (d)   "Indemnifiable Expenses," "Indemnifiable Liabilities" and "Indemnifiable Amounts" shall have the meanings ascribed to those terms in Section 3(a) below.

        (e)   "Liabilities" shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.

        (f)    "Proceeding" shall mean any threatened or pending claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other

proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee's rights hereunder.

        (g)   "Subsidiary" shall mean any Entity of which the Company owns (either directly or indirectly) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such Entity.

2.     Services of Indemnitee. In consideration of the Company's covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as a director on the board of directors of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee's service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

3.     Agreement to Indemnify. The Company agrees to indemnify Indemnitee as follows:

        (a)   Subject to the exceptions contained in Section 4(a) and Section 6 below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by Indemnitee in connection with such Proceeding (referred to herein as "Indemnifiable Expenses" and "Indemnifiable Liabilities," respectively, and collectively as "Indemnifiable Amounts").

        (b)   Subject to the exceptions contained in Section 4(b) and Section 6 below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses.

4.     Exceptions to Indemnification. Indemnitee shall be entitled to indemnification under Section 3(a) and Section 3(b) above in all circumstances other than the following:

        (a)   If indemnification is requested under Section 3(a) and it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in the best interests of the Company, or, with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder.

        (b)   If indemnification is requested under Section 3(b) and

          (i)  it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (A) in good faith and (B) in a manner Indemnitee believed to be in the best interests of the Company, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder.

         (ii)  it has been adjudicated finally by a court of competent jurisdiction that Indemnitee is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, no Indemnifiable Expenses shall be paid with respect to such claim, issue or matter unless the court of competent jurisdiction in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Indemnifiable Expenses which such court shall deem proper.

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5.     Procedure for Payment of Indemnifiable Amounts. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3 of this Agreement and a short description of the basis for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee within ten (10) calendar days of receipt of the request. At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder.

6.     Indemnification for Expenses If Indemnitee is Wholly or Partly Successful. Notwithstanding anything contained in this Agreement to the contrary, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. Notwithstanding any of the foregoing, nothing herein shall be construed to limit an Indemnitee's right to indemnification which he or she would otherwise be entitled to pursuant to Section 3, and Section 4 hereof, regardless of the Indemnitee's success in a Proceeding.

7.     Effect of Certain Resolutions. Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's action was unlawful.

8.     Agreement to Advance Expenses; Conditions. The Company shall pay to Indemnitee all Indemnifiable Expenses incurred by Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding. Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to, or is prohibited by applicable law from, indemnification with respect to such Expenses.

9.     Procedure for Advance Payment of Expenses. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8, shall be made no later than ten (10) calendar days after the Company's receipt of such request.

10.   Remedies of Indemnities.

        (a)   Right to Petition Court. In the event that Indemnitee makes a request for payment of Indemnifiable Amounts under Section 3 and Section 5 herein or a request for an advancement of Indemnifiable Expenses under Sections 8 and Section 9 herein and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition a court to enforce the Company's obligations under this Agreement.

        (b)   Expenses. The Company agrees to reimburse Indemnitee in full for any Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any

3

action brought by Indemnitee under Section 10(a) above; provided, however, that if Indemnitee is unsuccessful, on the merits in such action, then the Company shall have no obligation to Indemnitee under this Section 10(b).

        (c)   Validity of Agreement. The Company shall be precluded from asserting in any Proceeding, including, without limitation, an action under Section 10(a) above, that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement.

        (d)   Failure to Act Not a Defense. The failure of the Company (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible.

11.   Notice by Indemnitee. Indemnitee agrees to notify the Company promptly upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder; provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses, unless, and only to the extent that, the Company did not otherwise become aware of such Proceeding and such failure results in forfeiture by the Company of substantial defenses, rights or insurance coverage.

12.   Representations and Warranties of the Company. The Company hereby represents and warrants to Indemnitee as follows:

        (a)   Authority. The Company has all necessary power and authority to enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company.

        (b)   Enforceability. This Agreement, when executed and delivered by the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by equitable principles, applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors' rights generally.

13.   Contract Rights Not Exclusive. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company's bylaws or certificate of incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in Indemnitee's official capacity and as to action in any other capacity as a result of Indemnitee's serving as a director of the Company.

14.   No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment to Indemnitee in respect of any Indemnifiable Amounts to the extent Indemnitee has otherwise actually received payment with respect to such amounts under any insurance policy, the Company's certificate of incorporation or bylaws, or any other indemnity agreement.

15.   Claims by Indemnitee Against Company. Notwithstanding any provision of this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company or matters related to the Company unless the Company has joined in or consented to

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the initiation of such Proceeding, or unless (and to the extent that) such Indemnitee is successful in such Proceeding against the Company.

16.   Successors. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status.

17.   Change in Law. To the extent that a change in Delaware law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the bylaws or certificate of incorporation of the Company and this Agreement, Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent.

18.   Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties.

19.   Modifications and Waiver. Except as provided in Section 15 above with respect to changes in Delaware law which broaden the right of Indemnitee to be indemnified by the Company, no supplement, modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver.

20.   General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed

(i)	If to Indemnitee, to:        Chris Baggott     47 South Meridian, Suite 300     Indianapolis, IN 46204     Tel: 317-423-3928
(ii)	If to the Company, to:        47 South Meridian, Suite 300     Indianapolis, IN 46204     Tel: 317-423-3928

or to such other address as may have been furnished in the same manner by any party to the others.

21.   Governing Law. This Agreement shall be governed by and construed and enforced under the laws of Delaware without giving effect to the provisions thereof relating to conflicts of law.

22.   Consent to Jurisdiction. Each of the Company and Indemnitee hereby irrevocably and unconditionally consents to submit to the sole and exclusive jurisdiction of any United States District Court of competent jurisdiction (the "Courts"), and agrees not to commence any litigation relating thereto except in such Courts. Each of the Company and Indemnitee hereby irrevocably and unconditionally waives any objection to the laying of venue of any Proceeding arising out of or relating to this Agreement in the Courts, and hereby irrevocably and unconditionally waives and agrees not to plead or claim that any such Proceeding brought in any such Court has been brought in an inconvenient forum.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

COMPANY:
EXACTTARGET, INC.
By:
	Name: Scott Dorsey
	Title: President
INDEMNITEE:
By:
	Name:

Signature page to the Director Indemnification Agreement

EX-10.6

Exhibit 10.6

LOAN AND SECURITY AGREEMENT

        This LOAN AND SECURITY AGREEMENT (this "Agreement") dated as of December 1, 2005, between SILICON VALLEY BANK, a California chartered bank, with its principal place of business at 3003 Tasman Drive, Santa Clara, California 95054 and with a loan production office located at 230 West Monroe Street, Suite 720, Chicago, Illinois 60606 ("Bank") and EXACTTARGET, INC., a Delaware corporation ("Borrower"), provides the terms on which Bank shall extend credit to Borrower and Borrower shall repay Bank. The parties agree as follows:

1      ACCOUNTING AND OTHER TERMS

        Accounting terms not defined in this Agreement shall be construed following GAAP. Calculations and determinations must be made following GAAP. The term "financial statements" includes the notes and schedules attached thereto. The terms "including" and "includes" always mean "including (or includes) without limitation," in this or any Loan Document. Capitalized terms in this Agreement shall have the meanings set forth in Article 13. All other terms contained in this Agreement, unless otherwise indicated, shall have the meaning provided by the Code, to the extent such terms are defined therein.

2      LOAN AND TERMS OF PAYMENT

2.1.  Promise to Pay. Borrower hereby unconditionally promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions as and when due in accordance with this Agreement.

2.1.1 Equipment Advance.

        (a)   Availability. Within ten (10) days of the Closing Date, Bank shall make one (1) advance (the "Equipment Advance") not exceeding the Equipment Line. The Equipment Advance may only be used to finance Eligible Equipment purchased on or after January 1, 2005 through the Closing Date (determined based upon the applicable invoice date of such Eligible Equipment) and the Equipment Advance may not exceed 100% of the equipment invoice excluding taxes, shipping, warranty charges, freight discounts and installation expense relating to such Equipment, unless such costs constitute Other Equipment. Borrower shall deliver the equipment invoices with respect to the Equipment Advance to Bank within ninety (90) days after the Closing Date. In the event that the amount of the equipment invoices excluding taxes, shipping, warranty charges, freight discounts and installation expense relating to such Equipment, unless such costs constitute Other Equipment, is less than the amount of the related Equipment Advance, Borrower must immediately pay in cash to Bank the difference. After repayment, the Equipment Advance may not be reborrowed.

        (b)   Interest. The principal amounts outstanding for the Equipment Advance shall accrue interest at a per annum rate equal to the aggregate of the Prime Rate and one percent (1.0%), which interest shall be payable monthly.

        (c)   Repayment. The Equipment Advance is payable in (i) thirty-six (36) consecutive equal monthly installments of principal, plus (ii) monthly payments of accrued interest, beginning on the first Business Day of the month following the month in which the Funding Date occurs (or commencing on the Funding Date if the Funding Date is the first Business Day of the month) with respect to the Equipment Advance (each a "Payment Date"). All unpaid principal and accrued interest is due and payable in full on the last Payment Date with respect to the Equipment Advance.

Borrowing Procedure.    To obtain the Equipment Advance, Borrower must notify Bank (which notice shall be irrevocable) by facsimile no later than 3:00 p.m. Eastern time one (1) Business Day before the day on which the Equipment Advance is to be made. The Borrower shall include with such notice a

Payment/Advance Form signed by a Responsible Officer or designee and include a copy of the invoice for the Equipment being financed.

2.1.2 Undisbursed Credit Extensions. Bank's obligation to lend the undisbursed portion of the Obligations shall terminate if, in Bank's, sole discretion, there has been a material adverse change in the general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower presented to and accepted by Bank prior to the execution of this Agreement.

2.2. Interest Rate.

        (a)   Default Rate. After an Event of Default, Obligations shall bear interest at five percent (5.0%) above the rate effective immediately before the Event of Default.

        (b)   Adjustment to Interest Rate. The applicable interest rate hereunder shall increase or decrease when the Prime Rate changes.

        (c)   360-Day Year. Interest is computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed.

        (d)   Debit of Accounts. Bank may debit any of Borrower's deposit or operating accounts, including Account Number [                        ], for principal and interest payments when due, or any other amounts Borrower owes Bank, when due. Bank shall promptly notify Borrower after it debits Borrower's accounts. These debits shall not constitute a set off.

        (e)   Payments. Interest is payable monthly on the first calendar day of each month. Payments received after 12:00 noon Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional fees or interest, as applicable, shall continue to accrue.

2.3.  Fees. Borrower shall pay to Bank:

        (a)   Commitment Fee. A fully earned, non-refundable commitment fee of $8,500.00 due and payable on the Closing Date;

        (b)   Prepayment Fee. On the date Borrower pays all or any part of the outstanding Equipment Advance, other than as set forth in Section 2.1.1(c), a fully earned, non-refundable prepayment fee equal to $17,000.00; and

        (c)   Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and expenses) incurred through and after the Closing Date, when due.

3      CONDITIONS OF LOANS

3.1.  Conditions Precedent to Initial Credit Extension. Bank's obligation to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, such documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate, including, without limitation, the following:

        (a)   this Agreement;

        (b)   a certificate of the Secretary of Borrower with respect to articles, bylaws, incumbency and resolutions authorizing the execution and delivery of this Agreement, the Loan Documents, and all transactions related thereto;

        (c)   an Intellectual Property Security Agreement;

        (d)   Perfection Certificate by Borrower;

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        (e)   landlord's waiver;

        (f)    a legal opinion of Borrower's counsel (authority and enforceability);

        (g)   Securities Account Control Agreement;

        (h)   insurance certificate;

        (i)    payment of the fees and Bank Expenses;

        (j)    Certificate of Foreign Qualification (if applicable);

        (k)   Certificate of Good Standing/Legal Existence; and

        (l)    such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

3.2.  Conditions Precedent to all Credit Extensions. Bank's obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following:

        (a)   timely receipt of any Payment/Advance Form; and

        (b)   the representations and warranties in Article 5 shall be true in all material respects on the date of the Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default shall have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower's representation and warranty on that date that the representations and warranties in Article 5 remain true in all material respects.

4      CREATION OF SECURITY INTEREST

4.1.  Grant of Security Interest. Borrower hereby grants Bank, to secure the payment and performance in full of all of the Obligations and the performance of each of Borrower's duties under the Loan Documents, a continuing security interest in, and pledges and assigns to Bank, the Collateral, wherever located, whether now owned or hereafter acquired or arising, and all proceeds and products thereof. Subject to Section 5.2, Borrower warrants and represents that the. security interest granted herein shall be a first priority security interest in the Collateral.

        Except as noted on the Perfection Certificate, Borrower is not a party to, nor is bound by, any material license (other than over the counter software that is commercially available to the public) or other material agreement with respect to which Borrower is the licensee that prohibits or otherwise restricts Borrower from granting a security interest in Borrower's interest in such license or agreement or any other property. Borrower shall provide written notice to Bank within ten (10) days of entering or becoming bound by, any such license or agreement which is reasonably likely to have a material impact on Borrower's business or financial condition. Borrower shall take such steps as Bank reasonably requests to obtain the consent of, authorization by or waiver by, any person whose consent or waiver is necessary for all such licenses or contract rights to be deemed "Collateral" and for Bank to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such license or agreement, whether now existing or entered into in the future.

        If Borrower shall, at any time, acquire a commercial tort claim, Borrower shall promptly notify Bank in a writing signed by Borrower of the brief details thereof and grant to Bank in such writing security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Bank.

4.2. Termination by Borrower.

        Borrower may terminate this Agreement by sending written notice to Bank and paying in full all Obligations. If this Agreement is terminated, Bank's lien and security interest in the Collateral shall continue until Borrower fully satisfies the Obligations.

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4.3.  Authorization to File Financing Statements. Borrower hereby authorizes Bank to file UCC financing statements, without notice to Borrower, with all appropriate jurisdictions in order to perfect or protect Bank's interest or rights hereunder, including a notice that any disposition of the Collateral, by either Borrower or any other Person, shall be deemed to violate the rights of Bank under the Code.

5      REPRESENTATIONS AND WARRANTIES

        Borrower represents and warrants to Bank as follows:

5.1.  Due Organization and Authorization. Borrower, and each Subsidiary, is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its business or its ownership of property requires that it be qualified except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. In connection with this Agreement, Borrower delivered to Bank a perfection certificate signed by Borrower (the "Perfection Certificate"). Borrower represents and warrants to Bank that: (a) Borrower's exact legal name is that indicated on the Perfection Certificate and on the signature page hereof; and (b) Borrower is an organization of the type, and is organized in the jurisdiction, set forth in the Perfection Certificate; and (c) the Perfection Certificate accurately sets forth Borrower's organizational identification number or accurately states that Borrower has none; and (d) the Perfection Certificate accurately sets forth Borrower's place of business, or, if more than one, its chief executive office as well as Borrower's mailing address if different, and (e) all other information set forth on the Perfection Certificate pertaining to Borrower is accurate and complete. If Borrower does not now have an organizational identification number, but later obtains one, Borrower shall forthwith notify Bank of such organizational identification number.

        The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower's organizational documents, nor shall they constitute an event of default under any material agreement by which Borrower is bound. Borrower is not in default under any agreement to which or by which it is bound in which the default could reasonably be expected to cause a Material Adverse Change.

5.2.  Collateral. Borrower has good title to the Collateral, free of Liens except Permitted Liens. Borrower has no deposit account, other than the deposit accounts with Bank and deposit accounts described in the Perfection Certificate. The Collateral is not in the possession of any third party bailee (such as a warehouse). Except as hereafter disclosed to Bank in writing by Borrower, none of the components of the Collateral shall be maintained at locations other than as provided in the Perfection Certificate. In the event that Borrower, after the date hereof, intends to store or otherwise deliver any portion of the Collateral to a bailee, then Borrower will first receive the written consent of Bank and such bailee must acknowledge in writing that the bailee is holding such Collateral for the benefit of Bank. Borrower is the sole owner of the Intellectual Property, except for non-exclusive licenses granted to its customers in the ordinary course of business. Each Patent is valid and enforceable and no part of the Intellectual Property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of the Intellectual Property violates the rights of any third party except to the extent such claim could not reasonably be expected to cause a Material Adverse Change.

5.3.  Litigation. Except as shown in the Perfection Certificate, there are no actions or proceedings pending or, to the knowledge of Borrower's Responsible Officers or legal counsel, threatened by or against Borrower or any Subsidiary in which an adverse decision could reasonably be expected to cause, a Material Adverse Change.

5.4.  No Material Deterioration in Financial Statements. All consolidated financial statements for Borrower and any Subsidiary delivered to Bank fairly present in all material respects Borrower's consolidated financial condition and Borrower's consolidated results of operations. There has not been

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any material deterioration in Borrower's consolidated financial condition since the date of the most recent financial statements submitted to Bank.

5.5.  Solvency. The fair salable value of Borrower's assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; Borrower is not left with unreasonably small capital after the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts), as they mature.

5.6.  Regulatory Compliance. Borrower is not an "investment company" or a company "controlled" by an "investment company" under the Investment Company Act of 1940. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause a Material Adverse Change. None of Borrower's or any Subsidiary's properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings and given all notices to, all government authorities that are necessary to continue its business as currently conducted except where the failure to obtain or make such consents, declarations, notices or filings would not reasonably be expected to cause a Material Adverse Change.

5.7.  Subsidiaries; Investments. Borrower does not own any stock, partnership interest or other equity securities except for Permitted Investments.

5.8.  Full Disclosure. No written representation, warranty or other statement of Borrower in any certificate or written statement given to Bank taken together with all such written certificates and written statements given to Bank contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained in the certificates or statements not misleading (it being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as facts and that actual results during the period or periods covered by such projections and forecasts may differ from the projected or forecasted results).

6      AFFIRMATIVE COVENANTS

        Borrower shall do all of the following:

6.1.  Government Compliance. Borrower shall maintain its, and all Subsidiaries', legal existence and good standing in their respective jurisdictions of formation and maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be expected to have a material adverse effect on Borrower's business or operations. Borrower shall comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with which could have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change.

6.2. Financial Statements, Reports, Certificates.

        (a)   Borrower shall deliver to Bank: (i) as soon as available, but no later than thirty (30) days after the last day of each month, a company prepared consolidated balance sheet and income statement covering Borrower's consolidated operations during the period certified by a Responsible Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than one hundred eighty (180) days after the last day of Borrower's fiscal year, audited consolidated financial

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statements of Borrower prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank; (iii) in the event that Borrower's stock becomes publicly held, within five (5) days of filing, Borrower shall provide Bank copies of or electronic notice of links to all statements, reports and notices made available to Borrower's security holders or to any holders of Subordinated Debt and all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could result in damages or costs to Borrower or any Subsidiary of One Hundred Thousand Dollars ($100,000.00) or more; (v) prompt notice of any material change in the composition of the Intellectual Property, or the registration of any Copyright (in accordance with Section 6.7), including any subsequent ownership right of Borrower in or to any Copyright, Patent or Trademark not shown in any intellectual property security agreement between Borrower and Bank or knowledge of an event that materially adversely affects the value of the Intellectual Property; and (vi) other financial information reasonably requested by Bank.

        (b)   Within thirty (30) days after the last day of each month, Borrower shall deliver to Bank aged listings of accounts receivable and accounts payable (by invoice date), along with a deferred revenue report, certified by a Responsible Officer.

        (c)   Within thirty (30) days after the last day of each month, Borrower shall deliver to Bank, with the monthly financial statements, a Compliance Certificate signed by a Responsible Officer in the form of Exhibit C.

6.3.  Inventory; Returns. Borrower shall keep all Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors shall follow Borrower's customary practices as they exist at the Closing Date. Borrower must promptly notify Bank of all returns, recoveries, disputes and claims that involve more than One Hundred Thousand Dollars ($100,000.00).

6.4.  Taxes. Borrower shall make, and cause each Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance, with GAAP) and will deliver to Bank, on demand, appropriate certificates attesting to such payments.

6.5.  Insurance. Borrower shall keep its business and the Collateral insured for risks and in amounts, and as Bank may reasonably request. Insurance policies shall be in a form, with companies, and in amounts that are satisfactory to Bank in its reasonable discretion. All property policies shall have a lender's loss payable endorsement showing Bank as an additional loss payee and all liability policies shall show Bank as an additional insured and all policies shall provide that the insurer must give Bank at least twenty (20) days notice before canceling its policy. At Bank's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Bank's option, be payable to Bank on account of the Obligations. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, Borrower shall have the option of applying the proceeds of any casualty policy up to $200,000, in the aggregate, toward the replacement or repair of destroyed or damaged property; provided that (i) any such replaced or repaired property (a) shall be of equal or like value as the replaced or repaired Collateral and (b) shall be deemed Collateral in which Bank has been granted a first priority security interest and (ii) after the occurrence and during the continuation of an Event of Default all proceeds payable under such casualty policy shall, at the option of Bank, be payable to Bank on account of the Obligations. If Borrower fails to obtain insurance as required under Section 6.5 or to pay any amount or furnish any required proof of payment to third persons and Bank, Bank may make all or part of such payment or obtain such insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent.

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6.6. Accounts.

        (a)   In order to permit Bank to monitor Borrower's financial performance and condition, Borrower, and, all Borrower's Subsidiaries', shall maintain all of Borrower's, and such Subsidiaries, depository, operating and securities accounts with Bank. Notwithstanding the foregoing, Borrower may maintain an account at National City Bank (the "National City Account"), provided that the amount that Borrower shall maintain in the National City Account at any one time shall be no greater than Two Hundred Thousand Dollars ($200,000.00); provided however, that Borrower may, at any time, maintain up to Five Hundred Thousand Dollars ($500,0.00.00) in the National City Account for up to five (5) Business Days, provided that, at the expiration of such five (5) Business Day period, any amounts in the National City Account in excess of Two Hundred Thousand Dollars ($200,000.00) shall be immediately transferred to Borrower's operating account maintained with Bank.

        (b)   Borrower shall identify to Bank, in writing, any bank or securities account opened by Borrower with any institution other than Bank. In addition, for each such account that Borrower at any time opens or maintains, Borrower shall, at Bank's request and option, pursuant to an agreement in form and substance acceptable to Bank, cause the depository bank or securities intermediary to agree that such account is the collateral of Bank, and enter into a control agreement pursuant to the terms hereunder (a "Control Agreement"). The provisions of the previous sentence shall not apply to deposit accounts exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of Borrower's employees.

6.7. Financial Covenants.

        Borrower shall maintain at all times, to be tested as of the last day of each month, unless otherwise noted:

        (a)   Adjusted Quick Ratio. A ratio of Quick Assets to Current Liabilities minus Deferred Revenue (as reflected on Borrower's balance sheet for such period) of at least: (i) 1.0 to 1.0 for the months ending November 30, 2005 and December 31, 2005, and (ii) 1.25 to 1.0 for the month ending January 31, 2006 and for each month thereafter.

        (b)   Net Worth. A Net Worth (as reflected on Borrower's balance sheet for such period) of at least: (i) Zero Dollars ($0.00), plus (ii) fifty percent (50%) of Borrower's net earnings per calendar quarter beginning with the quarter ending December 31, 2005.

6.8.  Registration of Intellectual Property Rights. Borrower shall not register any Copyrights or Mask Works in the United States Copyright Office unless it: (i) has given at least fifteen (15) days' prior written notice to Bank of its intent to register such Copyrights or Mask Works and has provided Bank with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (ii) executes a IP Agreement or such other documents as Bank may reasonably request in order to maintain the perfection and priority of Bank's security interest in the Copyrights proposed to be registered with the United States Copyright Office; and (iii) records such IP Agreement with the United States Copyright Office contemporaneously with filing the Copyright application(s) with the United States Copyright Office. Borrower shall promptly provide to Bank a copy of the Copyright application(s) filed with the United States Copyright Office, together with evidence of, the recording of the IP Agreement necessary for Bank to maintain the perfection and priority of its security interest in such Copyrights or Mask Works. Borrower shall provide written notice to Bank of any application filed by Borrower in the United States Patent Trademark Office for a patent or to register a trademark or service mark within 30 days of any such filing.

        Borrower shall: (i) protect, defend and maintain the validity and enforceability of the Intellectual Property; (ii) promptly advise Bank in writing of material infringements of the Intellectual Property;

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and (iii) not allow any Intellectual Property material to Borrower's business to be abandoned, forfeited or dedicated to the public without Bank's written consent.

6.9.  Account Control Agreement. Within thirty (30) days after the Closing Date, Borrower shall deliver to Bank a Control Agreement, in form and substance acceptable to Bank, executed by Borrower and National City Bank with respect to the National City Account.

6.10. Further Assurances. Borrower shall execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank's security interest in the Collateral or to effect the purposes of this Agreement.

7      NEGATIVE COVENANTS

        Borrower shall not do any of the following without Bank's prior written consent which shall not be unreasonably withheld:

7.1.  Dispositions. Convey, sell, lease, transfer, assign or otherwise dispose of (collectively a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, including the Intellectual Property, except for Transfers of (a) Inventory in the ordinary course of business; (b) non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; or (c) worn-out or obsolete Equipment. Borrower shall not enter into an agreement with any Person other than Bank which restricts the subsequent granting of a security interest in the Intellectual Property.

7.2.  Changes in Business, Ownership, Management or Business Locations. Engage in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto, or have a material change in its ownership (other than by the sale of Borrower's equity securities in a public offering or to venture capital investors so long as Borrower identifies to Bank the venture capital investors prior to the closing of the investment), or management. Borrower shall not, without at least thirty (30) days prior written notice to Bank: (a) relocate its chief executive office, or add any new offices or business locations, including warehouses (unless such new offices or business locations contain less than Five Thousand Dollars ($5,000.00) in Borrower's assets or property), or (b) change its jurisdiction of organization, or (c) change its organizational structure or type, or (d) change its legal name, or (e) change any organizational number (if any) assigned by its jurisdiction of organization.

7.3.  Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. A Subsidiary may merge or consolidate into another Subsidiary or into Borrower.

7.4.  Indebtedness. Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness.

7.5.  Encumbrance. Create, incur, or allow any Lien on any of its property, including the Intellectual Property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the first priority security interest granted herein. The Collateral may also be subject to Permitted Liens.

7.6.  Distributions; Investments. (a) Directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so; or (b) pay any dividends or make any distribution or payment or redeem, retire or purchase any capital stock.

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7.7.  Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower, except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a non-affiliated Person.

7.8.  Subordinated Debt. Make or permit any payment on any Subordinated Debt, except under the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt.

7.9.  Compliance. (a) Become an "investment company" or a company controlled by an "investment company", under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; (b) fail to meet the minimum funding requirements of ERISA, or permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; or (c) fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a material adverse effect on Borrower's business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so.

8      EVENTS OF DEFAULT

        Any one of the following shall constitute an event of default hereunder (an "Event of Default"):

8.1.  Payment Default. Borrower fails to pay any of the Obligations within three (3) days after their due date. During such three (3) day period the failure to cure the default shall not constitute an Event of Default (but no Credit Extension shall be made during such cure period).

8.2.  Covenant Default. (a) Borrower fails or neglects to perform any obligation in Section 6.2, 6.6 or 6.7 or violates any covenant in Article 7; or (b) Borrower fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant or agreement contained in this Agreement, any of the Loan Documents, or in any present or future agreement between Borrower and Bank and as to any default under such other material term, provision, condition, covenant or agreement that can be cured, has failed to cure the default within ten (10) days after the occurrence thereof; provided, however, that if the default cannot by its nature be cured within the ten (10) day period or cannot after diligent attempts by Borrower be cured within such ten (10) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional period (which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions shall be made during such cure period). Grace periods provided under this Section shall not apply, among other things, to financial covenants or any other covenants that are required to be satisfied, completed or tested by a date certain.

8.3.  Material Adverse Change. A Material Adverse Change occurs.

8.4.  Attachment. (a) Any material portion of Borrower's assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10) days; (b) the service of process upon Borrower seeking to attach, by trustee or similar process, any funds of Borrower on deposit with Bank, or any entity under control of Bank (including a subsidiary); (c) Borrower is enjoined; restrained, or prevented by court order from conducting a material part of its business; (d) a judgment or other claim becomes a Lien on a material portion of Borrower's assets; or (e) a notice of lien, levy, or assessment is filed against any of Borrower's assets by any government agency and not paid within ten (10) days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions shall be made during the cure period).

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8.5.  Insolvency. (a) Borrower is unable to pay its debts (including trade debts) as they become due or otherwise becomes insolvent; (b) Borrower begins an Insolvency Proceeding; or (c) an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within thirty (30) days (but no Credit Extensions shall be made before any Insolvency Proceeding is dismissed).

8.6.  Other Agreements. If there is a default in any agreement to which Borrower is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of One Hundred Thousand Dollars ($100,000.00) or that could result in a Material Adverse Change.

8.7.  Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Fifty Thousand Dollars ($50,000.00) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of ten (10) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment).

8.8.  Misrepresentations. If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document.

8.9.  Subordinated Debt. A default or breach occurs under any agreement between Borrower and any creditor of Borrower that signed a subordination agreement with Bank, or any creditor that has signed a subordination agreement with Bank breaches any terms of the subordination agreement.

9      BANK'S RIGHTS AND REMEDIES

        9.1.  Rights and Remedies. When an Event of Default occurs and continues, Bank may, without notice or demand, do any or all of the following:

        (a)   Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

        (b)   Stop advancing money or extending credit for Borrower's benefit under this Agreement or under any other agreement between Borrower and Bank;

        (c)   Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers advisable and notify any Person owing Borrower money of Bank's security interest in such funds and verify and/or collect the amounts owed by such account debtors. After the occurrence of an Event of Default, any amounts received by Borrower shall be held in trust by Borrower for Bank, and, if requested by Bank, Borrower shall immediately deliver such receipts to Bank in the form received from the account debtor, with proper endorsements for deposit;

        (d)   Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower shall assemble the Collateral if Bank requests and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank's rights or remedies;

        (e)   Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or for the credit or the account of Borrower;

        (f)    Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is hereby granted a non-exclusive, royalty-free license or other right

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to use without charge, Borrower's labels, Patents, Copyrights, Mask Works, rights of use, of any name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section, Borrower's rights under all licenses and all franchise agreements inure to Bank's benefit;

        (g)   Place a "hold" on any account maintained with Bank and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any control agreement or similar agreements providing control of any Collateral; and

        (h)   Exercise all rights and remedies and dispose of the Collateral according to the Code.

9.2.  Power of Attorney. Borrower hereby irrevocably appoints Bank as its lawful attorney-in-fact, to be effective upon the occurrence and during the continuance of an Event of Default, to: (a) endorse Borrower's name on any checks or other forms of payment or security; (b) sign Borrower's name on any invoice or bill of lading for any Account or drafts against account debtors; (c) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; (d) make, settle, and adjust all claims under Borrower's insurance policies; and (e) transfer the Collateral into the name of Bank or a third party as the Code permits. Borrower hereby appoints Bank as its lawful attorney-in-fact to sign Borrower's name on any documents necessary to perfect or continue the perfection of any security interest regardless of whether an Event of Default has occurred until all Obligations have been satisfied in full and Bank is under no further obligation to make Credit Extensions hereunder. Bank's foregoing appointment as Borrower's attorney in fact, and all of Bank's rights and powers, coupled with an interest, are irrevocable until all Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions terminates.

9.3.  Bank Expenses. Any amounts paid by Bank as provided herein shall constitute Bank Expenses and are immediately due and payable, and shall bear interest at the then applicable rate hereunder and be secured by the Collateral. No payments by Bank shall be deemed an agreement to make similar payments in the future or Bank's waiver of any Event of Default.

9.4.  Bank's Liability for Collateral. So long as Bank complies with reasonable banking practices regarding the safekeeping of Collateral and Section 9-207 of the Code, Bank shall not be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other Person. Borrower bears all risk of loss, damage or destruction of the Collateral.

9.5.  Remedies Cumulative. Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity. Bank's exercise of one right or remedy is not an election, and Bank's waiver of any Event of Default is not a continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver hereunder shall be effective unless signed by Bank and then is only effective for the specific instance and purpose for which it was given.

9.6.  Demand Waiver. Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable.

10    NOTICES

        All notices or demands by any party to this Agreement or any related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage

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prepaid, return receipt requested, or by facsimile at the addresses listed below. Either Bank or Borrower may change its notice address by giving the other party written notice.

If to Borrower:	EXACTTARGET, INC. 20 North Meridian Street Indianapolis, Indiana 46204 Attn: Traci Dolan Fax: (317) 275-5023
If to Bank:	Silicon Valley Bank 230 West Monroe, Suite 720 Chicago, Illinois 60606 Attn: Mr. John Kinzer Fax: (312) 704-1532
with a copy to:	Riemer & Braunstein LLP Three Center Plaza Boston, Massachusetts 02108 Attn: David A. Ephraim, Esquire Fax: (617) 880-3456

11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

        Illinois law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in Illinois. NOTWITHSTANDING THE FOREGOING, BANK SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION WHICH BANK DEEMS NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR TO OTHERWISE ENFORCE BANK'S RIGHTS AGAINST BORROWER OR ITS PROPERTY.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12    GENERAL PROVISIONS

12.1. Successors and Assigns. This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights or Obligations under it without Bank's prior written consent which may be granted or withheld in Bank's discretion. Bank has the right, without the consent of or notice to Borrower, to sell, transfer, assign, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits under this Agreement, the Loan Documents or any related agreement.

12.2. Indemnification. Borrower hereby indemnifies, defends and holds Bank and its directors, officers, employees and agents harmless against: (a) all obligations, demands, claims, and liabilities asserted by any other party or Person in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct.

12.3. Right of Set Off. Borrower hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all

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deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

12.4. Time of Essence. Time is of the essence for the performance of all Obligations in this Agreement.

12.5. Severability of Provision. Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

12.6. Amendments in Writing; Integration. All amendments to this Agreement must be in writing signed by both Bank and Borrower. This Agreement and the Loan Documents represent the entire agreement about this subject matter, and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.

12.7. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement.

12.8. Survival. All covenants, representations and warranties made in this Agreement continue in full force until this Agreement has terminated pursuant to its terms, and all Obligations have been satisfied. The obligation of Borrower in Section 12.2 to indemnify Bank shall survive until the statute of limitations with respect to such claim or cause of action shall have run.

12.9. Confidentiality. In handling any confidential information, Bank shall exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made: (a) to Bank's subsidiaries or affiliates in connection with their business with Borrower; (b) to prospective transferees or purchasers of any interest in the Credit Extensions (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective transferee's or purchaser's agreement to the terms of this provision); (c) as required by law, regulation, subpoena, or other order, (d) as required in connection with Bank's examination or audit; and (e) as Bank considers appropriate in exercising remedies under this Agreement. Confidential information does not include information that either: (i) is in the public domain or in Bank's possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (ii) is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information.

13    DEFINITIONS

13.1. Definitions. In this Agreement:

        "Accounts" are all existing and later arising accounts, contract rights, and other obligations owed Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and Borrower's Books relating to any of the foregoing, as such definition may be amended from time to time according to the Code.

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        "Affiliate" is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and each of that Person's senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person's managers and members.

        "Bank Expenses" are all audit fees and expenses and reasonable costs or expenses (including reasonable attorneys' fees and expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings).

        "Borrower's Books" are all Borrower's books and records including ledgers, records regarding Borrower's assets or liabilities, the Collateral, business operations or financial condition and all computer programs or storage or any equipment containing the information.

        "Business Day" is any day that is not a Saturday, Sunday or a day on which Bank is closed. "Closing Date" is the date of this Agreement.

        "Code" is the Uniform Commercial Code as adopted in Illinois, as amended and as may be amended and in effect from time to time.

        "Collateral" is any and all properties, rights and assets of Borrower granted by Borrower to Bank or arising under the Code, now, or in the future, in which Borrower obtains an interest, or the power to transfer rights, in the property described on Exhibit A.

        "Contingent Obligation" is, for any Person, any direct or indirect liability, contingent or not, of that Person for (a) any indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or indirectly liable; (b) any obligations for undrawn letters of credit for the account of that Person; and (c) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but "Contingent Obligation" does not include endorsements in the ordinary course of business. The amount of a Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but the amount may not exceed the maximum of the obligations under any guarantee or other support arrangement.

        "Control Agreement" is defined in Section 6.6(b).

        "Copyrights" are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held.

        "Credit Extension" is the Equipment Advance or any other extension of credit by Bank for Borrower's benefit.

        "Current Liabilities" are all obligations and liabilities of Borrower to Bank, plus, without duplication, the aggregate amount of Borrower's Total Liabilities which mature within one (1) year.

        "Deferred Revenue" is all amounts invoiced in advance of performance under contracts and not yet recognized as revenue.

        "Eligible Equipment" is (a) general purpose computer equipment, office equipment, test and laboratory equipment, furnishings, subject to the limitations set forth herein, and (b) Other Equipment that complies with all of Borrower's representations and warranties to Bank and which is acceptable to Bank in all respects. All Equipment financed with the proceeds of the Equipment Advance may be new or used.

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        "Equipment" is all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

        "Equipment Advance" is defined in Section 2.1.1.

        "Equipment Line" is an Equipment Advance of up to One Million Seven Hundred Thousand Dollars ($1,700,000.00).

        "ERISA" is the Employment Retirement Income Security Act of 1974, and its regulations.

        "Event of Default" is defined in Article 8.

        "Funding Date" is any date on which the Equipment Advance is made to or on account of Borrower.

        "GAAP" is generally accepted accounting principles in the United States.

        "Indebtedness" is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease obligations and (d) Contingent Obligations.

        "Insolvency Proceeding" is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

        "Intellectual Property" is:

        (a)   Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions and all licenses or other rights to use and all license fees and royalties from the use;

        (b)   Any trade secrets and any Intellectual Property rights in computer software and computer software products now or later existing, created, acquired or held;

        (c)   All design rights which may be available to Borrower now or later created, acquired or held;

        (d)   Any claims for damages (past, present or future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above.

All proceeds and products of the foregoing, including all insurance, indemnity or warranty payments.

        "Inventory" is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title.

        "Investment" is any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

        "IP Agreement" is a certain Intellectual Property Security Agreement executed and delivered by Borrower to Bank dated as of the Closing Date.

        "Lien" is a mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

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        "Loan Documents" are, collectively, this Agreement, any guaranties executed by any guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated.

        "Mask Works" are all mask works or similar rights available for the protection of semiconductor chips, now owned or later acquired.

        "Material Adverse Change" is: (a) a material impairment in the perfection or priority of Bank's security interest in the Collateral or in the value of such Collateral; (b) a material adverse change in the business, operations, or condition (financial or otherwise) of Borrower; (c) a material impairment of the prospect of repayment of any portion of the Obligations; or (d) the determination by Bank, based upon information available to it and in its reasonable judgment, that there is a reasonable likelihood that Borrower shall fail to comply with one or more of the financial covenants in Article 6 during the next succeeding financial reporting period.

        "Net Worth" is, on any date, the consolidated total assets of Borrower.

        "Obligations" are all liabilities, obligations, covenants, agreements, debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later, including letters of credit, cash management services, and foreign exchange contracts, if any, and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank.

        "Other Equipment" is intangible property such as computer software and software licenses, other intangible property, limited use property and other similar property and soft costs approved by Bank, including sales tax, freight and installation expenses. Unless otherwise agreed to by Bank, not more than thirty percent (30%) of the proceeds of the Equipment Line shall be used to finance Other Equipment.

        "Payment/Advance Form" is in the form of Exhibit B.

        "Payment Date" is defined in Section 2.1.1(c).

        "Patents" are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

        "Perfection Certificate" is defined in Section 5.1.

        "Permitted Indebtedness" is:

        (a)   Borrower's indebtedness to Bank under this Agreement or the Loan Documents;

        (b)   Indebtedness existing on the Closing Date and shown on the Perfection Certificate;

        (c)   Subordinated Debt;

        (d)   Indebtedness secured by Permitted Liens; and

        (e)   Extensions, refinancings, modifications, amendments and restatements of any items of Permitted Indebtedness (a) through (d) above, provided that the principal amount thereof is not increased or the terms thereof are not modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

        "Permitted Investments" are:

        (a)   Investments shown on the Perfection Certificate and existing on the Closing Date; and

        (b)   (i) marketable direct obligations issued or unconditionally guaranteed by the United States or its agency or any state maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating from either Standard & Poor's Corporation or Moody's Investors Service, Inc., (iii) Bank's certificates of

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deposit issued maturing no more than 1 year after issue, and (iv) any other investments administered through Bank.

        "Permitted Liens" are:

        (a)   Liens existing on the Closing Date and shown on the Perfection Certificate or arising under this Agreement or other Loan Documents;

        (b)   Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of Bank's security interests;

        (c)   Leases or subleases and non-exclusive licenses or sublicenses granted in the ordinary course of Borrower's business, if the leases, subleases, licenses and sublicenses permit granting Bank a security interest; and

        (d)   Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase.

        "Person" is any individual, sole proprietorship, partnership, limited liability company, joint venture, company, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or government agency.

        "Prime Rate" is Bank's most recently announced "prime rate," even if it is not Bank's lowest rate.

        "Quick Assets" is, on any date, Borrower's unrestricted cash and eighty percent (80%) of net billed accounts receivable determined according to GAAP.

        "Responsible Officer" is each of the Chief Executive Officer, President, Chief Financial Officer and Controller of Borrower.

        "Subordinated Debt" is debt incurred by Borrower subordinated to Borrower's debt to Bank (pursuant to a subordination agreement entered into between Bank, Borrower and the subordinated creditor), on terms acceptable to Bank.

        "Subsidiary" is any Person, or any other business entity of which more than 50% of the voting stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person.

        "Total Liabilities" is on any day, obligations that should, under GAAP, be classified as liabilities on Borrower's consolidated balance sheet, including all Indebtedness, and current portion of Subordinated Debt permitted by Bank to be paid by Borrower, but excluding all other Subordinated Debt.

        "Trademarks" are trademark and service mark rights, registered or not, applications to register and registrations and like protections, and the entire goodwill of the business of Borrower connected with the trademarks.

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17

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the Closing Date.

BORROWER:

EXACTTARGET, INC.

By /s/ Traci M. Dolan
Name: Traci M. Dolan
Title: V.P. Finance & Administration

BANK:

SILICON VALLEY BANK

By /s/ Unreadable
Name: John Unreadable
Title: Relationship Manager

18

EX-23.2

Exhibit 23.2

Report and Consent of Independent Registered Public Accounting Firm

The Board of Directors
ExactTarget, Inc.

        The audits referred to in our report dated November 12, 2007, included the related financial statement schedules as of December 31, 2006, and for each of the years in the three-year period ended December 31, 2006, included in the registration statement. These financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statement schedules based on our audits. In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

        We consent to the use of our report included herein and to the reference to our firm under the heading "Experts" in the prospectus. The audit report covering the December 31, 2006 financial statements refers to the adoption of Statement of Financial Accounting Standards No. 123(R), Share Based Payments, for accounting for share based payment.

/s/ KPMG LLP
Indianapolis, Indiana
December 14, 2007