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Exhibit 10.11    
    

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into, effective as of the 3rd day of November, 2003, by
and between Stephen Head ("Employee") and Interactive Intelligence, Inc. ("Company"), an Indiana corporation. 

WITNESSETH:  

        WHEREAS, the Employee possesses certain skills which the Company wishes to utilize in its business, and the
Employee wishes to provide certain services to the Company upon the terms and conditions set forth in this Agreement; 

        NOW, THEREFORE, in consideration of the premises and of the mutual promises and agreements contained herein and other good and valuable
consideration, the receipt, legal adequacy and sufficiency of which are hereby acknowledged, the parties agree as follows: 

        Section 1.    Employment.    The Company engages the Employee to serve
the Company, and the Employee agrees to serve the Company as an employee in such capacities as the Board of Directors of the Company may, from time to time, determine, upon the terms and conditions
hereinafter set forth. 

        Section 2.    Term; Renewal.    The term of the Employee's employment
under this Agreement shall be for an initial term commencing and ending on the dates set forth on the Addendum attached hereto and incorporated herein by reference ("Addendum"), which term shall
automatically renew for successive one (1) year terms, on the same terms and conditions set forth herein unless either the Company or the Employee gives written notice to the other, at least thirty
(30) days prior to the expiration of the initial term or any renewal term, that the term will not renew. 

        Section 3.    Title, Services and Duties.    

        (a)   During
the term of employment hereunder, the Employee shall serve in the capacities described on the Addendum and shall perform the duties and responsibilities described
on the Addendum or as are normally associated with such a position in the Company's industry and as may be delegated to the Employee by the President or the Company's Board of Directors. 

        (b)   During
such employment, the Employee shall devote substantially all of the Employee's business time, attention, energy and skill to the business of the Company, and
shall perform such services in a faithful, competent and diligent manner at the direction of the President and of the Company's Board of Directors. 

        (c)   During
the Employee's employment, the Company shall provide the Employee with such office facilities and support services as the Company determines in its business
judgment to be appropriate for the Employee to perform the Employee's duties and responsibilities hereunder. 

        (d)   The
Employee shall comply with all policies and procedures adopted by the Company from time to time, including without limitation, policies regarding reimbursement for
business expenses incurred on behalf of the Company, and compliance with applicable laws. 

        Section 4.    Compensation as Employee.    At all times during the
initial term or any renewal term of this Agreement, the Company shall pay the Employee an annual salary in the amount set forth in the Addendum, payable at the usual payroll payment dates of the
Company, and any other options or benefits set forth in the Addendum. All amounts paid hereunder by Company to the Employee shall be subject to all applicable local, state and federal withholding
taxes. The Company may increase or decrease the salary set forth herein from time to time, in its sole discretion, but any decrease may only be made upon fifteen (15) days prior notice. 

 

        Section 5.    Termination and Severance Payments    

        (a)   In
the event that the employment of the Employee is terminated for cause or in the event that the Employee resigns his/her employment with the Company, the Employee
shall be paid any salary and any other benefits which have then accrued and to which the Employee is entitled to at such time. However, in such event, the Employee shall not be entitled to any
severance compensation as set forth in subparagraph (b) below. 

        (b)   In
the event that the employment of the Employee is terminated by the Company for any reason other than for cause, in addition to receiving all accrued salary and
benefits to which the Employee is entitled to at such time, the Company further agrees to pay the Employee as severance pay an amount equal to the Employee's salary as in effect at such time for an
additional one (1) month from the date of termination, with payments to be made on the Company's usual payroll payment dates. 

        (c)   All
amounts paid under Subsections (a) or (b) hereof to the Employee shall be subject to all applicable local, state or federal withholding taxes, if any. 

        Section 6.    Employee Benefits.    

        (a)   The
Employee shall be limited each calendar year to a vacation benefit for the amount of time shown in the Addendum (prorated from the date of commencement to the end of
that applicable calendar year). All vacation benefits must be fully utilized in the calendar year in which accrued, provided that (i) no vacation may be taken during the first six (6) months of the
initial term hereof without the prior written consent of the Company, (ii) the Employee must comply with procedures adopted from time to time by the Company with respect to the scheduling of
vacations, and (iii) if because of the Company's requirements, the Company does not approve the Employee's requested vacation schedule and thus prevents the Employee from fully utilizing all of the
Employee's vacation in the year earned, the Company and the Employee shall in good faith make arrangements for either the carryover of such unused vacation to the next calendar year or such other
arrangements as are mutually satisfactory. 

        (b)   During
the term of the Employee's employment hereunder, the Employee shall be entitled to participate, upon the same terms and conditions applicable to employees
generally in any life, health, hospitalization or any other insurance program, or any other pension or benefit plan which the Company may from time to time provide or make available to the Company's
employees and for which the Employee is eligible and qualified; provided that if the inclusion of the Employee under any such program or plan causes or would cause either such program or plan to be
terminated or the Company to incur a materially disproportionate additional cost, the Company may elect to provide benefits of a substantially similar nature which avoids such adverse effects. 

        Section 7.    Covenant Not to Compete.    

        (a)   During
the Employee's service hereunder and for a period of eighteen (18) months thereafter, regardless of the reason or method of termination, the Employee will not,
directly or indirectly, for the Employee's own benefit or the benefit of any other person or entity: 

        (i)    solicit
in any manner, seek to obtain, or service the business of any customer of the Company, other than for the Company; 

        (ii)   become
an owner of any business, if such business competes with the Company; 

        (iii)  become
employed by or serve as an agent, independent contractor or representative of any business which competes with the Company; 

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        (iv)  solicit
the employment of or hire any employee of the Company, or encourage any employee to terminate his or her employment with the Company; or 

        (v)   prepare
in any manner to compete with the Company. 

        (b)   For
purposes of this Agreement, a "customer" shall be deemed to be any person, business, partnership, proprietorship, firm, organization or corporation which has done
business with the Company or which has been solicited or serviced in any manner, directly or indirectly, by the Company within eighteen (18) months prior to the date of the termination of the
Employee, and the phrase "service the business of any customer" means the development, modification, enhancement or improvement of any product or service offered by the Company or which is reasonably
related to the products or services offered by the Company. The Employee hereby acknowledges that, by virtue of the Employee's position and access to information, the Employee will have advantageous
familiarity and personal contacts with the Company's customers, wherever located, and that the restrictions contemplated hereby are reasonable for the protection of the Company's goodwill and customer
base, and the Company's efforts in the development of such customers. 

        (c)   If
the Employee does not comply with the provisions of this Section 7, the eighteen (18) month period of non-competition provided herein shall be tolled and deemed not
to run during any period(s) of noncompliance, the intention of the parties being to provide eighteen (18) full months of non-competition by the Employee after the termination or expiration of this
Agreement. 

        Section 8.    Covenant Not to Disclose Confidential Information.    

        (a)   The
term "Confidential Information" as used herein shall mean any and all software programs, customer lists, trade secrets and information, know-how, skills, knowledge,
ideas, knowledge of customer's commercial requirements, pricing methods, sales and marketing techniques, dealer relationships and agreements, financial information, intellectual property, codes,
algorithms, research, development, research and development programs, processes, documentation, inventions, or devices used in or pertaining to the Company's business (i) which relate in any way to
the Company's business, products or processes; or (ii) which are discovered, conceived, developed or reduced to practice by the Employee, either alone or with others either (x) during the term of this
Agreement; or (y) at the Company's expense; or (z) on the Company's premises or with the Company's equipment. 

        (b)   During
the course of his/her services hereunder, the Employee may become knowledgeable about, or become in possession of, Confidential Information. If such Confidential
Information were to be divulged or become known to any competitor of the Company or to any other person outside the employ of the Company, or if the Employee were to consent to be employed by any
competitor of the Company or to engage in competition with the Company, the Company would be harmed. In addition, the Employee has or may develop relationships with the Company's customers which could
be used to solicit the business of such customers away from the Company. The parties have entered into this Agreement to guard against such potential harm. 

        (c)   The
Employee shall not, directly or indirectly, use any Confidential Information for any purpose other than the benefit of the Company or communicate, deliver, exhibit
or provide any Confidential Information to any person, firm, partnership, corporation, organization or entity, except other employees or agents of the Company as required in the normal course of the
Employee's service as an employee or except as the President or any authorized officer of the Company may direct in writing. The covenant contained in this Section 8 shall be binding upon the Employee
during the term of this Agreement and following the termination hereof, for the shorter of the period until either (i) until such Confidential Information becomes obsolete; or (ii) until 

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such
Confidential Information becomes generally known in the Company's trade or industry by means other than a breach of this covenant. 

        (d)   The
Employee agrees that all Confidential Information and all records, documents and materials relating to all of such Confidential Information, shall be and remain the
sole and exclusive property of the Company. 

        Section 9.    Remedies.    

        (a)   The
Employee agrees that the Company will suffer irreparable damage and injury and will not have an adequate remedy at law in the event of any breach by the Employee of
any provision of Sections 7 or 8 hereof. Accordingly, in the event of a breach or of a threatened or attempted breach by the Employee of Sections 7 or 8 hereof, in addition to all other remedies to
which the Company is entitled under law, in equity, or otherwise, the Company shall be entitled to a temporary restraining order and permanent injunction (without the necessity of showing any actual
damage) or a decree of specific performance of the provisions of Sections 7 or 8 hereof and no bond or other security shall be required in that connection. The Company shall be entitled to recover
from the Employee, reasonable attorneys' fees and expenses incurred in any action wherein the Company successfully enforces the provisions of Sections 7 or 8 hereof against the breach or threatened
breach of those provisions by the Employee. 

        (b)   The
Employee acknowledges and agrees that in the event of termination of this Agreement for any reason whatsoever, the Employee can obtain other engagements or
employment of a kind and nature similar to that contemplated herein and that the issuance of an injunction to enforce the provisions of Sections 7 or 8 hereof will not prevent the Employee from
earning a livelihood. 

        (c)   The
covenants on the part of the Employee contained in Sections 7 or 8 hereof are essential terms and conditions to the Company entering into this Agreement, and shall
be construed as independent of any other provision in this Agreement. The existence of any claim or cause of action the Employee has against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of these covenants. 

        Section 10.    Inventions.    

        (a)   The
Employee shall disclose fully to the Company all inventions (as defined below) conceived or discovered by the Employee, whether solely or jointly with others during
the term of this Agreement. Such inventions shall belong solely to the Company and shall not belong to the Employee. During the term of this Agreement, the Employee shall assign to the Company,
exclusively and free from any royalty obligation or any other legal or equitable title or right of the Employee, all such inventions referred to above and all patents, trademarks, copyrights, and
maskworks, and any and all applications and rights pertaining thereto on a worldwide basis. The Employee shall assist the Company, during and subsequent to the term hereof, in every proper way, but
without any further compensation or additional consideration, to transfer and assign such inventions to and for the Company's benefit and enjoyment and to cooperate as may be reasonably requested to
perfect the Company's ownership therein and, if requested by the Company, to prosecute or direct in prosecuting any application for or registration with respect to any patent or other applicable
intellectual property right, including, but not in limitation thereof, the execution and delivery of applications for the registration of one or more intellectual property rights and assignments of
the same as may be deemed necessary or desirable by the Company in any office selected by the Company. The judgment of the Company with respect to the registrability of any particular item of
intellectual property shall be final and conclusive as between the Employee and the Company. 

4

 

        (b)   Any
improvements made upon such inventions by the Employee subsequent to the term hereof shall be presumed to have been developed during the term hereof and by and for
the benefit of the Company and accordingly shall be the property of the Company. 

        (c)   The
Employee agrees to execute such other standard forms relating to the invention or development of inventions and other intellectual properties as the Company may
require of its consultants and employees generally. 

        (d)   Prior
inventions of the Employee, if any, as listed on the Addendum, are excluded from the scope of this Agreement. 

        (e)   For
purposes of this Agreement, "inventions" includes all inventions, creations, developments, software programs, algorithms, routines, patterns, components,
compilations, devices, or improvements of any kind or nature, whether or not trade secret, patented, patentable, copyrighted or copyrightable, which the Employee had made or conceived or developed or
may make, conceive or develop, either solely or jointly with others, while in the employ of the Company or with the use of the Company's time, materials, equipment or facilities or relating in any way
to the Company's actual, anticipated, or subsequently arising business, products, services or activities, or arising out of or suggested by any task assigned to be performed by the Employee, solely or
jointly with others, for or on behalf of the Company. 

        Section 11.    Surrender of Records.    Upon termination of the
Employee's employment for any reason, the Employee shall immediately surrender to the Company any and all records, notes, documents, forms, manuals, photographs, instructions, lists, drawings,
blueprints, programs, diagrams or other written, printed or electronic material (including any and all copies made at any time whatsoever) in his or her possession or control which pertain to the
business of the Company. 

        Section 12.    Termination.    During the initial term or any renewal
term, the employment of the Employee may be terminated at will for any reason by either the Company or the Employee, with at least ten (10) days prior written notice by the terminating party delivered
to the other setting forth whether such termination was for cause or without cause to determine whether the Employee is entitled to any severance payment pursuant to Section 5 above. Notwithstanding
the foregoing, this Agreement shall be terminated immediately, without any notice or waiting period, upon the Employee's death. This Agreement may be terminated at any time by mutual agreement of the
parties. 

        Section 13.    Parties Bound.    All provisions of this Agreement
shall inure to the benefit of and be binding upon the parties hereto, their heirs, personal representatives, successors and assigns. 

        Section 14.    Effect and Modification.    This Agreement comprises
the entire agreement between the parties with respect to the subject matter hereof and supersedes all other earlier agreements relating to the subject matter hereof. No statement or promise, except as
herein set forth, has been made with respect to the subject matter of this Agreement. No modification or amendment hereof shall be effective unless in writing and signed by the Employee and an officer
of the Company (other than the Employee). 

        Section 15.    Non-Waiver.    The Company's or the Employee's failure
or refusal to enforce all or any part of, or the Company's or the Employee's waiver of any breach of this Agreement, shall not be a waiver of the Company's or the Employee's continuing or subsequent
rights under this Agreement, nor shall such failure or refusal or waiver have any affect on the subsequent enforceability of this Agreement. 

        Section 16.    Non-Assignability.    This Agreement contemplates that
the Employee will personally provide the services described herein, and accordingly, the Employee may not assign the Employee's rights or obligations hereunder, whether by operation of law or
otherwise, in whole or in part, without the prior written consent of the Company. 

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        Section 17.    Notice.    Any notice, request, instruction or other
document to be given hereunder to any party shall be in writing and delivered by hand, telegram, registered or certified United States mail return receipt requested, or other form of receipted
delivery, with all expenses of delivery prepaid, as follows: 

	If to the Employee:	 	To the most recent address the Company has on its records.

Employees most recent address (please fill in):

904 Salt Court

Redwood City, CA 94065
	

If to the Company:	
 	

Interactive Intelligence, Inc.

7601 Interactive Way

Indianapolis, IN 46278

Attn: Donald E. Brown, M.D., President

Any
notice to the employee shall also be sufficient, if sent to the most recent address of the employee on the Company's books and records. 

        Section 18.    Governing Law.    This Agreement is being delivered in
and shall be governed by the laws of the State of Indiana. All actions or proceedings shall be tried in the state or federal courts whose venue includes Marion County or Hamilton County, Indiana. 

        Section 19.    Prior Agreements.    

        (a)   The
Employee represents and warrants to the Company that the Employee is not a party to or otherwise bound by any agreement that would restrict in any way the
performance by the Employee of the Employee's duties, services and obligations under this Agreement, that the Employee has disclosed to the Company all employment type agreements to which the Employee
has been bound, including without limitation employment agreements, consulting agreements, non-compete agreements or covenants, confidentiality or non-disclosure agreements or covenants, and
intellectual property assignment agreements, and that the Company will not have any liability to any third party arising out of the Employee entering into this Agreement or performing hereunder. 

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. 

	 	 	By:	/s/  STEPHEN R. HEAD      
 Printed: Stephen Head
	

 	
 	
INTERACTIVE INTELLIGENCE, INC.
	

 	
 	

By:	

/s/  DONALD E. BROWN      
 Printed: Donald E. Brown, CEO

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ADDENDUM TO EMPLOYMENT AGREEMENT
  BETWEEN INTERACTIVE INTELLIGENCE, INC.
  AND
  STEPHEN HEAD, DATED, NOVEMBER 3, 2003    
    

        This Addendum relates to the Employment Agreement between Interactive Intelligence, Inc. and, Stephen Head dated November 3, 2003. This Addendum is incorporated
therein by reference and shall be an integral part of the Employment Agreement. 

	1.	 	Name of Employee:	Stephen Head
	

2.	
 	

Initial Term:	

Two (2) Years
	

3.	
 	

Date of Commencement:	

November 3, 2003
	

4.	
 	

Date Initial Term Ends:	

November 3, 2005
	

5.	
 	

Title:	

CFO
	

6.	
 	

Job Description:	

Administration
	

7.	
 	

Initial Compensation:	

$140,000
	

8.	
 	

Stock Options:	

 	
 	

 
	 	 	    - Plan	Incentive Stock Option Plan ("Qualified")
	 	 	    - Number	#75,000 (seventy five thousand) shares
	 	 	    - Exercise Price	Price in effect as of the grant date
	

9.	
 	

Amount of Vacation :	

Two(2) weeks per calendar year
	

10.	
 	

Other Benefits:	

Medical, Vision and Dental Insurance, 401k Plan, Long Term Disability, Cafeteria 125 Plan
	

11.	
 	

Prior Inventions:	

 	
 	

 
	 	 	 	

	

Date: November 3, 2003	

/s/ SRH
 Initials	
 	

/s/ DEB
 Initials
	

(#31613 and 40525)	

 	
 	

 

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Exhibit 10.11

EMPLOYMENT AGREEMENT

ADDENDUM TO EMPLOYMENT AGREEMENT BETWEEN INTERACTIVE INTELLIGENCE, INC. AND STEPHEN HEAD, DATED, NOVEMBER 3, 2003QuickLinks
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Exhibit 10.20    
    

PROMISSORY NOTE  

	Borrower:	 	Interactive Intelligence, Inc.

7601 Interactive Way

Indianapolis, IN 46278	 	Lender:	 	KeyBank National Association

IN-MM-Indianapolis (9th floor)

10 W. Market Street

Indianapolis, IN 46204
	

	Principal Amount: $3,000,000.00	 	Initial Rate: 4.000%	 	Date of Note: December 19, 2003

PROMISE TO PAY.    Interactive Intelligence, Inc. ("Borrower") promises to pay to KeyBank National Association
("Lender"), or order, in lawful money of the United States of America, on demand, the principal amount of Three Million & 00/100 Dollars ($3,000,000) or so much as may be outstanding, together
with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance.  

 PAYMENT.    Borrower will pay this loan immediately upon Lender's demand. Payment in full is due immediately upon Lender's demand. Borrower
will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning February 1, 2004, with all subsequent interest payments to be due on the same day of each
month after that. Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then
to any late charges. Then annual interest rate for this Note is computed on a 365/360 basis; that is, by applying the ratio of the annual interest rate over a year of 360 days, multiplied by
the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. Borrower will pay Lender at Lender's address shown above or at such other place as
Lender may designate in writing.  

 VARIABLE INTEREST RATE.    The interest rate on this Note is subject to change from time to time based on changes in an index which is the Prime Rate announced by
Lender ("the Index"). The Index is not necessarily the lowest rate charged by Lender on its loans and is set by Lender in its sole discretion. If the Index becomes unavailable during the term of this
loan, Lender may designate a substitute index after notifying Borrower. Lender will tell Borrower the current Index rate upon Borrower's request. The interest rate change will not occur more often
than each day that the Index changes. The interest rate will change automatically and correspondingly on the date of each announced change of the Index by Lender. Borrower understands that Lender may
make loans based on other rates as well. The Index currently is 4.000% per annum. The interest rate to be applied to the unpaid principal balance of this Note will be at a rate
equal to the Index, resulting in an initial rate of 4.000% per annum. NOTICE: Under no circumstances will the interest rate on this Note be more than the maximum rate allowed
by applicable law. 

PREPAYMENT.    Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not
be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. Except for the foregoing, Borrower may pay without penalty all or a portion
of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language. If Borrower sends
such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender. All written communications
concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions
or limitations or as full satisfaction of a disputed amount much be mailed or delivered to: KeyBank National Association, IN-MM-Indianapolis (9th floor),
10 W. Market St., Indianapolis, IN 46204. 

LATE CHARGE.    If a regularly scheduled interest payment is 10 days or more late, Borrower will be charged  5.000% of the unpaid portion of the regularly
scheduled payment or %50.00, whichever is  

 greater. If Lender demands payment of this loan, and Borrower does not pay the loan in full within 10 days after Lender's demand, Borrower also
will be charged either 5.000% of the unpaid portion of the sum of the unpaid principal plus accrued unpaid interest or $50.00, whichever is greater.

INTEREST AFTER DEFAULT.    Upon default, including failure to pay upon final maturity, Lender, at its option, may, if permitted under
applicable law, increase the variable interest rate on this Note to 3.000 percentage points over the Index. The interest rate will not exceed the maximum rate permitted by applicable law. 

LENDER'S RIGHTS.    Upon Lender's demand, Lender may declare the entire unpaid principal balance on this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount. Under all circumstances, the Indebtedness will be repaid without relief from any Indiana or other valuation and appraisement laws. 

ATTORNEY'S FEES; EXPENSES.    Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including without limitation all
attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also
will pay any court costs, in addition to all other sums provided by law. 

JURY WAIVER.    Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Lender or Borrower against the other.  

 GOVERNING LAW.    This Note will be governed by, construed and enforced in accordance with federal law and the laws of the State of Indiana.
This Note has been accepted by Lender in the State of Indiana.  

 RIGHT OF SETOFF.    To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or
some other account). This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or
any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against
any and all such accounts. 

LINE OF CREDIT.    This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing by
Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing. All communications, instructions, or directions by telephone or otherwise
to Lender are to be directed to Lender's office shown above. The following person currently is authorized to request advances and authorize payments under the line of credit until Lender receives from
Borrower, at Lender's address shown above, written notice of revocation of his or her authority: Steve Head, Chief Financial Officer of Interactive
Intelligence, Inc. Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or
(B) credited to any of Borrower's accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal
records, including daily computer print-outs. 

DEMAND LINE OF CREDIT.    Borrower understands that Lender is authorized to make an annual (or more frequent) credit review based upon
Borrower's current financial condition in determining whether to continue the line of credit. Nevertheless, Lender may, at any time, with or without cause, refuse to advance funds or extend credit
under the line of credit. 

SUCCESSOR INTERESTS.    The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, person representatives, successors
and assign, and shall inure to the benefit of Lender and it successors and assigns. 

GENERAL PROVISIONS.    Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any
other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice f dishonor. 

Upon
any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to
realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone. All such parties also agree that
Lender my modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several. 

PRIOR TO SIGNING THIS NOTE, BOROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING TH EVARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE
NOTE.  

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.  

BORROWER:  

INTERACTIVE INTELLIGENCE, INC.  

	By:	 	/s/  STEPHEN R. HEAD      
 Steve Head, Chief Financial Officer of Interactive
Intelligence, Inc.	 

COMMERCIAL PLEDGE AND SECURITY AGREEMENT  

	Grantor:	 	Interactive Intelligence, Inc.

7601 Interactive Way

Indianapolis, IN 46278	 	Lender:	 	KeyBank National Association

IN-MM-Indianapolis (9th floor)

10 W. Market Street

Indianapolis, IN 46204
	

THIS COMMERCIAL PLEDGE AND SECURITY AGREEMENT dated December 19, 2003, is made and executed between Interactive Intelligence, Inc.
("Grantor") and KeyBank National Association ("Lender").  

 GRANT OF SECURITY INTEREST.    For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the
indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law.  

 COLLATERAL DESRIPTION.    The word "Collateral" as used in this Agreement means all of Grantor's property (however owned if more than one), in the possession of, or
subject to the control of, Lender (or in the possession of, or subject to the control of, a third party subject to the control of Lender), whether existing now or later and whether tangible or
intangible in character, including without limitation each and all of the following: 

        All Assets held in McDonald Investment account #88543924  

In addition, the word "Collateral" includes all of Grantor's property (however owned), in the possession of, or subject to the control of, Lender (or in the possession of, or
subject to the control of, a third party subject to the control of Lender), whether now or hereafter existing and whether tangible or intangible in character, including without limitation each of the
following: 

	(A)
	All property to which Lender acquires title or documents of title.

 
	(B)
	 All property assigned to Lender.

 
	(C)
	 All promissory notes, bills of exchange, stock certifications, bonds, investment property, savings passbooks, time certificates of deposit, insurance policies, and
all other
instruments and evidence of an obligation.

 
	(D)
	 All records relating to any of the property described in this Collateral section, whether in the form of a writing, microfilm, microfiche, or electronic media.

 
	(E)
	 All Income and Proceeds from the collateral as defined herein.  

 CROSS-COLLATERALIZATION.    In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of Grantor to Lender, or
any one or more of them, as well as all claims by Lender against Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note,
whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated whether Grantor may be liable individually or
jointly with others, whether obligated or guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of
limitations, and whether the obligation to repay such amounts my be or hereafter may become otherwise unenforceable. 

RIGHT OF SETOFF.    To the extent permitted by applicable law, Lender reserves a right of setoff in all Grantor's accounts with Lender
(whether checking, savings, or some other account). This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future. However, this does not include
any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Grantor authorizes Lender, tot the extent permitted by applicable law, to charge or setoff all sums owing
on the indebtedness against any and all such accounts. 

REPRESENTATIONS AND WARRANTIES WITH RESPECT OT THE COLLATERAL.    Grantor represents and warrants to the Lender that: 

 Ownership.    Grantor is the lawful owner of the collateral free and clear of all security interests, liens, encumbrances, registered pledges, adverse claims, and any
other claims of others except as disclosed to and accepted by Lender in writing prior to execution of this Agreement. 

 Right to Pledge.    Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral. 

 Authority; Binding Effect.    Grantor has the full right, power and authority to enter into this agreement and to grant a security interest in the Collateral to
Lender. This Agreement is binding upon Grantor as
well as Grantor's successors and assigns, and is legally enforceable in accordance with its terms. The foregoing representations and warranties, and all other representations and warranties contained
in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement is terminated or cancelled as provided herein. 

 No Further Assignment.    Grantor has not, and shall not, sell, assign, transfer, encumber or otherwise dispose of any of Grantor's rights in the Collateral except as
provided in this Agreement. 

 No Defaults.    There are no defaults existing under the Collateral, and there are no offsets or counterclaims to the same. Grantor will strictly and promptly perform
each of the terms, conditions, covenants and agreements, if any, contained in the Collateral which are to be performed by Grantor. 

 No Violations.    The execution and delivery of this Agreement will not violate any law or agreement governing Grantor or to which Grantor is a party, and its
certificate or articles of incorporation and bylaws do not prohibit any term or condition of this Agreement. 

 Financing Statement.    Grantor authorizes Lender to file a UCC-1 financing statement, or alternatively, a copy of this Agreement to perfect
Lender's security interest. At Lender's request, Grantor additionally agrees to sign all other documents that are necessary to perfect, protect, and continue Lender's security interest in the
Property. Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender is required by law to pay such fees and costs. Lender may
sign and file financing statements without Grantor's signature, and Grantor irrevocably appoints Lender to execute financing statements and documents of title in Grantor's name and to execute all
documents necessary to transfer title if there is a default. Lender may file a copy of this Agreement as a financing statement. If Grantor changes Grantor's name or address, or the name or
address of any person granting a security interest under this Agreement changes, Grantor will promptly notify the Lender of such change. 

LENDER'S RIGHTS AND OBLIGATIONS WITH RESPECT TO THE COLLATERAL.    Lender may hold the Collateral until all Indebtedness has been paid and
satisfied. Thereafter Lender may deliver the Collateral to Grantor or to any other owner of the Collateral. Lender shall have the following rights in addition to all other rights Lender may have by
law: 

 Maintenance and Protection of Collateral.    Lender may, but shall not be obligated to, take steps as it deems necessary or desirable to protect, maintain, insure,
store, or care for the Collateral, including paying of any liens or claims against the Collateral. This may include such things as hiring other people, such as attorneys, appraisers or other experts.
Lender may charge Grantor for nay cost incurred in so doing. When applicable law provides more than one method of perfection of Lender's security interest, Lender may choose the method(s) to be used.
If the Collateral consists of stock, bonds or other securities for which no certificate has been issued, Grantor agrees, at Lender's request, either to request issuance of an appropriate certificate
or to give instructions on Lender's forms to the issuer, transfer agent, mutual fund company, or broker, as the case may be, to record on its books or records Lender's security interest in the
Collateral. 

 Income and Proceeds from the Collateral.    Lender may receive all Income and Proceeds and add it to the Collateral. Grantor agrees to deliver to Lender immediately
upon receipt, in the exact form received and without commingling with other property, all Income and Proceeds from the Collateral which may be received by, paid, or delivered to Grantor or for
Grantor's account, whether as an addition to, in discharge of, in substitution of, or in exchange for any of the Collateral. 

 Application of Cash.    At Lender's option, Lender may apply any cash, whether included in the Collateral or received as Income and Proceeds or through liquidation,
sale, or retirement, of the Collateral, to the satisfaction of the Indebtedness or such portion thereof as Lender shall choose, whether or not matured. 

 Transactions with Others.    Lender may (1) extend time for payment or other performance, (2) grant a renewal or change in terms or conditions, or
(3) compromise, compound or release any obligation, with any one or more Obligators, endorsers, or Guarantors of the Indebtedness as Lender deems advisable, without obtaining the prior written
consent of Grantor, and no such act or failure to act shall affect Lender's rights against Grantor or the Collateral. 

 All Collateral Secures Indebtedness.    All Collateral shall be security for the Indebtedness, whether the Collateral is located at one or more offices or branches of
Lender. This will be the case whether or not the office or branch where Grantor obtained Grantor's loan knows about the Collateral or relies upon the Collateral as security. 

 Collection of Collateral.    Lender at Lender's option may, but need not, collect the Income and Proceeds directly from the Obligors. Grantor authorizes and directs
the Obligors, if Lender decides to collect the Income and Proceeds, to pay and deliver to Lender all Income and Proceeds from the Collateral and to accept Lender's receipt for the payments. 

 Power of Attorney.    Grantor irrevocably appoints Lender as Grantor's attorney-in-fact, with full power of substitution, (a) to
demand, collect, receive, receipt for, sue and recover all Income and Proceeds and other sums of money and other property which may now or hereafter become due, owing or payable from the Obligors in
accordance with the terms of the Collateral; (b) to execute, sign and endorse any and all instruments, receipts, checks, drafts and warrants issued in payment for the Collateral; (c) to
settle or compromise any and all claims arising under the Collateral, and in the place and stead of Grantor, execute and deliver Grantor's release and acquittance for Grantor; (d) to file any
claim or claims or to take any action or institute or take part in any proceedings, either in Lender's own name or in the name of Grantor, or otherwise, which in the discretion of Lender may seem to
be necessary or advisable; and (e) to execute in Grantor's name and deliver to the Obligors on Grantor's behalf, at the time and in the manner specified by the Collateral, any necessary
instruments or documents. 

 Perfection of Security Interest.    Upon Lender's request, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral. When
applicable law provides more than one method of perfection of Lender's security interest, Lender may choose the method(s) to be used. Upon Lender's request, Grantor will sign and deliver any writings
necessary to perfect Lender's security interest. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary
to perfect, amend, or to continue the security interest granted in this Agreement or to demand termination of filings of other secured parties. This is a continuing Security
Agreement and will continue in effect even though all or any part of the indebtedness is paid in full and even though for a period of time Grantor may not be indebted to Lender.  

 LENDER'S EXPENDITURES.    If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with
any provision of this Agreement or any Related Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this
Agreement or any Related Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems 

appropriate,
including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, any time levied or placed on the Collateral and paying all costs
for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date
incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be
added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or
(2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts.
Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default. 

LIMIATIONS ON OBLIGATIONS OFLENDER.    Lender shall use ordinary reasonable care in the physical preservation and custody of the Collateral in
Lender's possession, but shall have no other obligation to protect the Collateral or its value. In particular, but without limitation, Lender shall have no responsibility for (A) any
depreciation in value of the Collateral or for the collection or protection of any Income and Proceeds from the Collateral, (B) preservation of rights against parties to the Collateral or
against third persons, (C) ascertaining any maturities, calls, conversions, exchanges, offers, tenders, or similar matters relating to any of the collateral, or (D) informing Grantor
about any of the above, whether or not Lender has or is deemed to have knowledge of such matters. Except as provided above, Lender shall have no liability for depreciation or deterioration of the
Collateral. 

DEFAULT.    Default will occur if payment in full is not made immediately when due. 

RIGHT AND REMEDIES ON DEFAULT.    If Default occurs under this Agreement, at any time thereafter, Lender may exercise any one or more of the
following rights and remedies: 

 Accelerate Indebtedness.    Declare all Indebtedness, including any prepayment penalty which Grantor would be required to pay, immediately due and payable, without
notice of any kind to Grantor. 

 Collect the Collateral.    Collect any of the Collateral and, at Lender's option and to the extent permitted by applicable law, retain possession of the Collateral
while suing on the Indebtedness. 

 Sell the Collateral.    Sell the Collateral, at Lender's discretion, as a unit or in parcels, at one or more public or private sales. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender shall give or mail to Grantor, and other persons as required by law, notice at
least ten (10) days in advance of the time and place of any public sale, or of the time after which any private sale may be made. However, no notice need be provided to any person who, after
Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. Grantor agrees that any requirement of reasonable notice as to Grantor is satisfied if
Lender mails notice by ordinary mail addressed to Grantor at the last address Grantor has given Lender in writing. If a public sale is held, there shall be sufficient compliance with all requirements
of notice to the public by a single publication in any newspaper of general circulation in the county where the Lender is located, setting forth the time and place of sale and a brief description of
the property to be sold. Lender may be a purchaser at any public sale. Under all circumstances, the Indebtedness will be repaid without relief from any Indiana or other valuation and appraisement
laws. 

 Sell Securities.    Sell any securities included in the Collateral in a manner consistent with applicable federal and state securities laws. If, because of
restrictions under such laws, Lender is unable, or believes Lender is unable, to sell the securities in an open market transaction, Grantor agrees that Lender will have no obligation to delay sale
until the securities can be registered. Then Lender may make a private sale to one or more persons or to a restricted group of persons, even though such sale may result in a price that is less
favorable than might be obtained in an open market transaction. Such a sale will be considered commercially reasonable. If any securities held as Collateral are "restricted securities" as defined in
the Rules of the Securities and Exchange 

Commission
(such as Regulation D or Rule 144) or the rules of state securities departments under state "Blue Sky" laws, or if Grantor or any other owner of the Collateral is an affiliate
of the issuer of the securities, Grantor agrees that neither Grantor, nor any member of Grantor's family, nor any other person signing this Agreement will sell or dispose of any securities of such
issuer without obtaining Lender's prior consent. 

 Rights and Remedies with Respect to Investment Property, Financial Assets and Related Collateral.    In addition to other rights and remedies granted under this
Agreement and under applicable law, Lender may exercise any or all of the following rights and remedies: (1) register with any issuer or broker or other securities intermediary any of the
Collateral consisting of investment property or financial assets (collectively herein, "investment property") in Lender's sole name or in the name of Lender's broker, agent or nominee;
(2) cause any issuer, broker or other securities intermediary to deliver to Lender any of the Collateral consisting of securities, or investment property capable of being delivered;
(3) enter into a control agreement or power of attorney with any issuer or securities intermediary with respect to any Collateral consisting of investment property, on such terms as Lender may
deem appropriate, in its sole discretion, including without limitation, an agreement granting to Lender any of the rights provided hereunder without further notice to or consent by Grantor;
(4) execute any such control agreement on Grantor's behalf and in Grantor's name, and hereby irrevocably appoints Lender as
agent and attorney-in-fact, coupled with an interest, for the purpose of executing such control agreement on Grantor's behalf; (5) exercise any and all rights of Lender
under any such control agreement or power of attorney; (6) exercise any noting, conversion, registration, purchase, option, or other rights with respect to any Collateral; (7) collect,
with or without legal action, and issue receipts concerning any notes, checks, drafts, remittances or distributions that are paid or payable with respect to any Collateral consisting of investment
property. Any control agreement entered with respect to any investment property shall contain the following provisions, at Lender's discretion. Lender shall be authorized to instruct the issuer,
broker or other securities intermediary to take or to refrain from taking such actions with respect to the investment property as Lender may instruct, without further notice to or consent by Grantor.
Such action may include without limitation the issuance of entitlement orders, account instructions, general trading or buy or sell orders, transfer and redemption orders, and stop loss orders. Lender
shall be further entitled to instruct the issuer, broker or securities intermediary to sell or to liquidate any investment property, or to pay the cash surrender or account termination value with
respect to any and all investment property, and to deliver all such payments and liquidations proceeds to Lender. Any such control agreement shall contain such authorizations as are necessary to place
Lender in "control" of such investment collateral, as contemplated under the provisions of the Uniform Commercial Code, and shall fully authorize Lender to issue "entitlement orders" concerning the
transfer, redemption, liquidation or disposition of investment collateral, in conformance with the provisions of the Uniform Commercial Code. 

 Foreclosure.    Maintain a judicial suit for foreclosure and sale of the Collateral. 

 Transfer Title.    Effect transfer of title upon sale of all or part of the Collateral. For this purpose, Grantor irrevocable appoints Lender as Grantor's
attorney-in-fact to execute endorsements, assignments and instruments in the name of Grantor and each of them (if more than one) as shall be necessary or reasonable. 

 Other Rights and Remedies.    Have and exercise any or all of the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, at
law, in equity, or otherwise. 

 Application of Proceeds.    Apply any cash which is part of the Collateral, or which is received from the collection or sale of the Collateral, to reimbursement of
any expenses, including any costs for registration of securities, commissions incurred in connection with a sale, attorney's fees and court costs, whether or not there is a lawsuit and including any
fees on appeal, incurred by Lender in connection with the collection and sale of such Collateral and to the payment of the Indebtedness of Grantor to Lender, with any excess funds to be paid to
Grantor as the interest of Grantor may 

appear.
Grantor agrees, to the extent permitted by law, to pay any deficiency after application of the proceeds of the Collateral to the Indebtedness. 

 Election of Remedies.    Except as may be prohibited by applicable law, all of Lender's right and remedies, whether evidence by this Agreement, the Related Documents,
or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to
make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its
remedies. 

MISCELLANEOUS PROVISIONS.    The following miscellaneous provisions are a part of this Agreement: 

 Amendments.    This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or
amendment. 

 Attorneys' Fees; Expenses.    Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses,
incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement.
Costs and expenses include Lender' attorneys' fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Grantor also shall pay all court costs and such additional fees as may
be directed by the court. 

 Caption Headings.    Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this
Agreement. 

 Governing Law.    This Agreement will be governed by, construed and enforced in accordance with federal law and the laws of the State of
Indiana. This Agreement has been accepted by Lender in the State of Indiana.  

 No Waiver by Lender.    Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or
constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be
granted or withheld in the sole discretion of Lender. 

 Notices.    Any notice required to be given under this Agreement shall be give in writing, and shall be effective when actually delivered, when actually received by
telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice
to the other parties, specifying that the purpose of the notice is to change the party's address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor's current address.
Unless otherwise provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice given to all Grantors. 

 Severability.    If a court of competent jurisdiction finds any provisions of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that
finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes
legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted form this Agreement. Unless otherwise required by law, the illegality, invalidity, or
unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 

 Successors and Assigns.    Subject to any limitations stated in this Agreement on transfer of Grantor's interest, this Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns. If ownership of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor's
successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor from the obligations of this Agreement or liability under the
Indebtedness. 

 Time is of the Essence.    Time is of the essence in the performance of this Agreement. 

 Waive Jury.    All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by
any party against any other party.  

 DEFINITIONS.    The following capitalized words and terms shall have the following meanings when used in this Agreement. Unless specifically stated to the contrary
all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the
singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code" 

 Agreement.    The word "Agreement" means this Commercial Pledge and Security Agreement, as this Commercial Pledge and Security Agreement may be amended or modified
from time to time, together with all exhibits and schedules attached to this Commercial Pledge and Security Agreement from time to time. 

 Borrower.    The word "Borrower" means Interactive Intelligence, Inc. and includes all co-signors and co-makers signing the Note. 

 Collateral.    The word "Collateral" means all of Grantor's right, title and interest in and to all the Collateral as described in the Collateral Description section
of this Agreement. 

 Default.    The word "Default" means the Default set forth in this Agreement in the section titled "Default". 

 Grantor.    The word "Grantor" means Interactive Intelligence, Inc. 

 Income and Proceeds.    The words "Income and Proceeds" mean all present and future income, proceeds, earnings, increases, and substitutions from or for the
Collateral of every kind and nature, including without limitation all payments, interest, profits, distributions, benefits, rights, options, warrants, dividends, stock dividends, stock splits, stock
rights, regulatory dividends, subscriptions, monies, claims for money due and to become due, proceeds of any insurance on the Collateral, shares of stock of different par value or no par value issued
in substation or exchange for shares included in the Collateral, whether voluntary or involuntary, by agreement or by operation of law, and all other property Grantor is entitled to receive on account
of such Collateral, including accounts, documents, instruments, chattel paper, investment property, and general intangibles. 

 Indebtedness.    The word "Indebtedness" means the indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all
other indebtedness and costs and expenses for which Grantor is responsible under this Agreement or under any of the Related Documents. 

 Lender.    The word "Lender" means KeyBank National Association, its successors and assigns. 

 Note.    The word "Note" means the Note executed by Interactive Intelligence, Inc. in the principal amount of $3,000,000 dated December 19, 2003,
together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement. 

 Obligor.    The word "Obligor" means without limitation any and all persons obligated to pay money or to perform some other act under the Collateral. 

 Property.    The word "Property" means all of Grantor's right, title and interest in and to all the Property as described in the "Collateral Description" section of
this Agreement. 

 Related Documents.    The words "Related Documents" mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security
agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the
Indebtedness. 

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL PREDGE AND SECURITY AGREEMENT AND AGREES TO ITS TERM. THIS AGREEMENT IS DATED DECEMBER 19, 2003.  

GRANTOR:  

INTERACTIVE INTELLIGENCE, INC.  

	By:	 	/s/  STEPHEN R. HEAD      
 Steve Head, Chief Financial Officer of Interactive
Intelligence, Inc.	 

QuickLinks

Exhibit 10.20

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