**Exhibit 10.12 (iii)**

**Interactive Intelligence, Inc.LETTER OF ASSIGNMENT**

March 15, 2001

Jerry FlemingInteractive Intelligence,  Inc.1332 Wildhorse ParkwayWildwood MO 63005

Dear Jerry:

This letter of assignment (“Agreement”) is toconfirm our France relocation offer to you (“the Employee”) as Executive VP,Americas and EMEA Sales for Interactive Intelligence, Inc. (“the Company”), andour mutual understanding concerning the general terms and conditions applicablein the foregoing capacity.  Thisassignment shall be in accordance with the following terms and conditions forthe duration of your assignment:

|   | 1.     | **Employing Company:**      | Interactive Intelligence, Inc.        |
|--------|--------|-----------------------------|---------------------------------------|
|   |   |                        | 8909 Purdue Road, Suite 300           |
|   |   |                        | Indianapolis, Indiana 46268           |
|   |   |                        |                                  |
|   | 2.     | **Position:**               | Executive VP, Americas and EMEA Sales |
|   |   |                        |                                  |
|   | 3.     | **Work Location:**          | Aix-en-Provence, France               |
|   |   |                        |                                  |
|   | 4.     | **Point of Origin:**        | St. Louis, Missouri                   |
|   |   |                        |                                  |
|   | 5.     | **Length of Assignment:**   | Thru August 31, 2002                  |
|   |   |                        |                                  |
|   | 6.     | **Effective Date:**         | April 1, 2001                         |
|   |   |                        |                                  |
|   | 7.     | **Salary:**                 | $200,000 annually                     |
|   |   |                        |                                  |
|   | 8.     | **Incentive Compensation:** | Per attached Comp Plan                |

It is our goal to provide you with acompensation package comparable to what you would receive as an employee basedin St. Louis, Missouri.  In that regard,consideration is given to additional housing and automobile costs which you mayreasonably expect to incur during your international assignment inAix-en-Provence, France.

This agreement and the benefits contained hereinare contingent upon your being authorized to work and reside in the HostCountry.  If you lose your authorizationto work in the Host Country at any time, for any reason during the life of thisagreement, the Company will consider your circumstances, but may, at its solediscretion, consider all or any portion of this agreement void.

You understand and agree that the differentialpayments and adjustments described below as well as any other allowances orgratuities provided by the Company to you under this Agreement are, at theelection of the Company, in substitution for the statutory benefits requiredunder the laws of the Host Country to compensate employees who are not entitledto receive these contractual benefits.
8.   **Income Tax Equalization**

At the Company’s expense and as required, Ernst& Young LLP will advise you as to the filing requirements in the home andhost countries, and will assist you with annual tax return preparation andfilings.  As required, Ernst & YoungLLP will also prepare the annual tax equalization calculation, in which yourincome will be equalized (or theoretically taxed using the home country rates).

9.          **Relocation Allowance**

You will be provided a relocation allowance upto $10,000 for properly documented one-time expenses.  This allowance would include items such as shipments, electricalappliance replacement, France work permits and other personal licenses, andother miscellaneous expenses incurred solely because of the move.  This allowance will be paid directly to youand must be accounted for, with any excess funds returned, by September 30,2001.

10.        **Host Country Housing**

You will be provided an allowance for suitablehousing at the host location.  TheCompany will pay up to $5,000 per month for rental expense, includingutilities, throughout your assignment. The rent allowance will be paid directly to the landlord and theutilities will be paid either to the landlord or you.

11.        **Host Country Automobiles**

You will be provided an allowance forautomobiles at the host location.  TheCompany will pay up to $1,300 per month for automobile leasing and insurance expensesthroughout your assignment.  Theautomobile allowance will be paid directly to the lessor or you.

12.  **Schooling Reimbursement**

The Company will reimburse tuition and otherassociated fees for your daughter while attending the International BilingualSchool of Provence (or similar) during the typical school year (Septemberthrough June).  This reimbursement maybe paid either to you or directly to the school.

             Thecompany will reimburse tuition and other associated fees for your son whileattending a College or University in France during the typical school year(September thru June) at the rate of 50% of the fees up to $4,500. Thisreimbursement may be paid either to you or directly to the school.

13.  **Home Leave Allowance**

Each calendar year while located inAix-en-Provence your family is eligible for a $3,500 Home Leave Allowance totravel to the home country.

14.  **Benefits**

You are entitled to participation in benefitprograms similar to Company-sponsored US programs for medical, dental, vision,and retirement coverage.  If applicable,the Company will either pay directly or reimburse you for all foreigngovernment social benefits costs. In return, you agree that any foreigngovernment social benefit made payable to you upon your termination, severance,or retirement from a foreign subsidiary or affiliate will be payable to theCompany.

15.  **Other Considerations**
              a)  Your assignment is anticipated to last through August 31, 2002.  However, you acknowledge that the Company  may re-assign you to the Home Country at any time and terminate the terms of  this agreement. Upon either completion of your assignment or termination of  your employment without cause, you will be eligible for relocation benefits  in connection with your transfer back to the Home Country in accordance with  the current relocation guidelines of the Company.                b)  In the event you voluntarily resign from this position, payment of  differentials or relocation allowances will be prorated based on the length  of your assignment term. The Company will direct you concerning the repayment  of money advanced to you or on your behalf. You agree to timely reimburse the  Company as directed in this instance.                c)  The terms and conditions of this Agreement shall at all times be governed by  the laws of the United States and the state of Indiana. All issues relating  to the Agreement’s validity, construction, performance, and termination shall  be subject to such laws. Notwithstanding the terms and provisions outlined  herein, this agreement is not intended as, nor does it imply, a guarantee of  employment or an employment contract. Employment at Interactive Intelligence,  Inc. is “at will.”
 
              d)          All other terms and conditions of  your assignment not specifically covered by this Letter of Assignment shall be  governed by the  terms and conditions  of your existing employment agreement.                e)          We realize that it is difficult to  foresee all of the future problems in connection with this assignment and  your return at the conclusion thereof.   While we have tried to cover major known conditions in this letter,  questions may arise regarding other items. We will gladly discuss such items  with you at the proper time, and I am sure that we will be able to arrive at  reasonable solutions.   Please signify your understanding of, and  agreement with, the terms of this agreement by initialing each page and  signing the last page of this letter.   Sincerely,
 
 /s/ Donald E. Brown4/1/01  /s/  Keith A. Midkiff4/1/01   CEODate VP,  FinanceDate             I  agree to the terms and conditions covering my assignment to Aix-en-Provence  as set forth in the above letter.       /s/Jeremiah  J. Fleming4/1/01       Executive  VP, Americas and EMEA SalesDate