Document:

Exhibit 10.9

    

      Exhibit
        10.9

      FIFTH
        THIRD BANK

       

      Revolving
        Note

       

      NOTE
        No.
        ______-_______

       

      $3,000,000.00

      November
        2nd, 2005

       

      1.  PROMISE
        TO PAY.
        On or
        before October 31, 2007, Interactive
        Intelligence, Inc.,
        an
        Indiana corporation which has its chief executive office at 7601 Interactive
        Way, Indianapolis, Indiana 46278 (“Borrower”) for value received, hereby
        promises to pay to the order of Fifth
        Third Bank (Central Indiana),
        a
        Michigan banking corporation located at 251 North Illinois Street, Indianapolis,
        Marion County, Indiana 46204 (together with its successors and assigns, the
        “Lender”) the sum of the lesser of (a) Three Million and no/100ths Dollars
        ($3,000,000.00) and (b) the Borrowing Base (as defined in paragraph 9 hereof)
        (the “Principal Sum”), plus interest as provided herein, less such amounts as
        shall have been repaid in accordance with this promissory note (this “Note”).
        The outstanding balance of this Note shall appear on a supplemental bank
        record
        and is not necessarily the face amount of this Note, which record shall evidence
        the balance due pursuant to this Note at any time. As used herein, “Local Time”
        means the time at the office of Lender specified in this Note.

       

      (a)  Principal
        and interest payments shall be made at Lender’s address above unless otherwise
        designated by Lender in writing. Each payment hereunder shall be applied
        first
        to advanced costs, charges and fees, then to accrued interest, and then to
        principal, which will be repaid in inverse chronological order of
        maturity.

       

      (b)  The
        loan
        evidenced by this Note is a revolving line of credit. The proceeds of this
        Note
        shall be made in the form of direct Advances (as this term and others are
        defined in Section 9 of this Note) which shall be made available to Borrower
        by
        Lender upon any written, electronic, telecopy or verbal loan request (provided
        that any verbal loan request is promptly confirmed in writing), which Lender
        in
        good faith believes to emanate from a properly authorized representative
        of
        Borrower, whether or not that is in fact the case. All Advances made hereunder
        shall be conclusively presumed to have been made by Lender to or for the
        benefit
        of Borrower. The proceeds of the loan evidenced hereby may be advanced, repaid
        and readvanced, in partial amounts, during the term of this Note and prior
        to
        the Maturity Date. Lender shall make each such advance to Borrower upon Lender’s
        receipt of Borrower’s request for disbursement and disbursement instructions,
        which shall be in such form as Lender requires. Lender is entitled to rely
        in
        good faith on any oral, telephonic or electronic mail communication requesting
        an advance or providing disbursement instructions, or both, which Lender
        receives from any person reasonably believed to be Borrower’s authorized
        representative. The entire principal balance outstanding hereunder, together
        with all accrued and unpaid interest and any other charges, advances and
        fees,
        if any, shall be due and payable in full on the earlier of the Maturity Date
        or
        upon acceleration of this Note.

       

      2.  INTEREST.

       

      (a)  Prior
        to
        the Maturity Date, interest will accrue on the unpaid balance of the Principal
        Sum at a variable rate of interest per annum (the “Note Rate”), which shall
        change in the manner set forth below, at Borrower's option:

       

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

       

      (i)  equal
        to
        one and one-quarter percent (1.25%) in excess of the LIBO Rate, such sum
        to be
        rounded up, if necessary, to the nearest whole multiple of one-sixteenth
        of one
        percent (1/16 of 1.0%) per annum; or

       

      (ii)  equal
        to
        the Prime Rate minus
        one and
        one-half percent (1.50%).

       

      (b)  If
        the
        obligation evidenced by this Note is not paid at maturity, whether maturity
        occurs by lapse of time, demand, acceleration or otherwise, the unpaid balance
        of the Principal Sum and any unpaid interest shall, thereafter until paid,
        bear
        interest at the Default Rate.

       

      (c)  Interest
        shall be calculated based on a 360-day year, charged for the actual number
        of
        days elapsed, and shall be payable on the first (1st) day of each month
        beginning on December 1, 2005.

       

      (d)  Notwithstanding
        any provision to the contrary in this Note, in no event shall the interest
        rate
        charged on the Principal Sum exceed the maximum rate of interest permitted
        under
        applicable state and/or federal usury law. Any payment of interest that would
        be
        deemed unlawful under applicable law for any reason shall be deemed received
        on
        account of, and will automatically be applied to reduce, the principal sum
        outstanding and any other sums (other than interest) due and payable to Lender
        under this Note, and the provisions hereof shall be deemed amended to provide
        for the highest rate of interest permitted under applicable law.

       

      3.  SECURITY.

       

      (a)  The
        following provides additional security for the payment of the obligations
        evidenced hereby, and of all other obligations and liabilities of Borrower
        to
        the Lender, whether such obligations and liabilities are now existing or
        hereafter arising. Borrower has granted the Lender a security interest in
        certain of Borrower’s securities pursuant to that certain Collateral Security
        and Pledge Agreement dated of even date herewith (as the same may be amended,
        restated or replaced from time to time, the “Security Agreement”), including all
        substitutions and additions thereto, and the proceeds thereof including
        insurance proceeds (all of the foregoing, together with any other property
        in
        which Lender shall at any time be given a security interest, shall hereinafter
        be referred to as the “Collateral”).

       

      (b)  If,
        at
        the time of payment in full of this Note and discharge hereof, Borrower shall
        be
        then directly, indirectly or contingently liable to the Lender as maker,
        endorser, surety or guarantor of any other note, bill of exchange, indebtedness
        or other instrument, due or to become due, now existing or hereafter arising
        and
        regardless of how evidenced, then the Lender may continue to hold any of
        the
        Collateral as security therefor, even though this Note shall have been
        surrendered to Borrower. The Lender shall not be bound to take any steps
        necessary to preserve any rights in the Collateral against prior parties.
        If any
        obligation evidenced by this Note is not paid when due, the Lender may, at
        its
        option, demand, set-off, sue for, collect or make any compromise or settlement
        it deems desirable with reference to the Collateral, and shall have the rights
        of a secured party under the law of the State of Indiana, and Borrower shall
        be
        liable for any deficiency.

       

      (c)  This
        Note
        is also secured by any of Borrower’s funds on deposit with the Lender. The
        failure to reference in this Note any security for this Note shall not, however,
        be construed to invalidate any security interest, pledge, mortgage or other
        lien
        which pursuant to the terms of any agreement or instrument creating such
        lien
        secures this Note or any or all obligations of Borrower to Lender
        generally.

       

        

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.  USE
        OF
        PROCEEDS.
        Borrower certifies that the proceeds of this loan are to be used for business
        purposes to provide working capital for Borrower’s operations.

       

      5.  COMMITMENT
        FEE.
        Lender
        has waived the commitment fee for the Loan. 

       

      6.  REPRESENTATIONS
        AND WARRANTIES.
        Borrower hereby warrants and represents to Lender the following:

       

      (a)  Organization
        and Qualification.
        Borrower is a corporation validly existing under the laws of Indiana, has
        the
        power and authority to carry on its business and to enter into and perform
        all
        documents relating to this loan transaction, and is qualified and licensed
        to do
        business in each jurisdiction in which such qualification or licensing is
        required. All information provided to Lender with respect to Borrower and
        its
        operations is true and correct.

       

      (b)  Due
        Authorization.
        The
        execution, delivery and performance by Borrower of the Loan Documents have
        been
        duly authorized by all necessary action by its board of directors, and shall
        not
        contravene any law or any governmental rule or order binding on Borrower,
        nor
        violate any agreement or instrument by which Borrower is bound, nor result
        in
        the creation of a Lien on any assets of Borrower except the Lien granted
        to
        Lender. Borrower has duly executed and delivered to Lender the Loan Documents
        and they are valid and binding obligations of Borrower enforceable according
        to
        their respective terms, except as limited by equitable principles and by
        bankruptcy, insolvency or similar laws affecting the rights of creditors
        generally. No notice to, or consent by, any governmental body is needed in
        connection with this transaction.

       

      (c)  Litigation.
        Except
        for those matters previously disclosed by Borrower to Lender [none of which
        matters, individually or in the aggregate, involve the possibility of materially
        and adversely affecting the properties, business, prospects, profits or
        condition (financial or otherwise) of Borrower or its subsidiaries or the
        ability of Borrower to perform Borrower’s obligations under the Loan Documents],
        there are no suits or proceedings pending or threatened against or affecting
        Borrower, and no proceedings before any governmental body are pending or
        threatened against Borrower.

       

      (d)  Business.
        Borrower is not a party to or subject to any agreement or restriction that
        may
        have a material adverse effect on Borrower’s business, properties or prospects.
        Borrower has all franchises, authorizations, patents, trademarks, copyrights
        and
        other rights necessary to advantageously conduct its business. They are all
        in
        full force and effect and are not in known conflict with the rights of
        others.

       

      (e)  Licenses,
        etc.
        Borrower
        has obtained any and all licenses, permits, franchises, governmental
        authorizations, patents, trademarks, copyrights or other rights necessary
        for
        the ownership of its properties and the advantageous conduct of its business.
        Borrower possesses adequate licenses, patents, patent applications, copyrights,
        trademarks, trademark applications, and trade names to continue to conduct
        its
        business as heretofore conducted by it, without any conflict with the rights
        of
        any other person or entity. All of the foregoing are in full force and effect
        and none of the foregoing are in known conflict with the rights of
        others.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (f)  Laws
        and Taxes.
        Borrower is in material compliance with all laws, regulations, rulings, orders,
        injunctions, decrees, conditions or other requirements applicable to or imposed
        upon Borrower by any law or by any governmental authority, court or agency.
        Borrower has filed all required tax returns and reports that are now required
        to
        be filed by it in connection with any federal, state and local tax, duty
        or
        charge levied, assessed or imposed upon Borrower or its assets, including
        unemployment, social security, and real estate taxes. Borrower has paid all
        taxes which are now due and payable. No taxing authority has asserted or
        assessed any additional tax liabilities against Borrower which are outstanding
        on this date, and Borrower has not filed for any extension of time for the
        payment of any tax or the filing of any tax return or report.

       

      (g)  Title.
        Borrower has good and marketable title to the assets reflected on the most
        recent balance sheet submitted to Lender, free and clear from all liens and
        encumbrances of any kind, except for (i) current taxes and assessments not
        yet
        due and payable, (ii) liens and encumbrances, if any, reflected or noted
        on such
        balance sheet or notes thereto, (iii) assets disposed of  in
        the
        ordinary course of business, and (iv) any security interests, pledges,
        assignments or mortgages granted to Lender to secure the repayment or
        performance of  the
        Obligations (collectively, the “Permitted Liens”).

       

      (h)  Subsidiaries
        and Joint Ventures.
        Except
        for the subsidiaries listed in the attached Exhibit
        “A,”
        Borrower
        has no subsidiaries and is not a party to any joint venture agreement, or
        partnership agreement with another entity.

       

      7.  AFFIRMATIVE
        COVENANTS.
        Borrower covenants with, and represents and warrants to, Lender that, from
        and
        after the execution date of the Loan Documents until the Obligations are
        paid
        and satisfied in full:

       

      (a)  Financial
        Statements.
        Borrower shall maintain a standard and modern system for accounting and shall
        furnish to Lender:

       

      (i)  Within
        sixty (60) days after the end of each quarter, an as-filed copy of Borrower’s
        Form 10-Q;

       

      (ii)  Within
        one-hundred twenty (120) days after the end of each fiscal year, a copy of
        Borrower’s financial statements audited by independent certified public
        accountants reasonably acceptable to Lender, including a balance sheet and
        a
        statement of income and retained earnings all prepared in accordance with
        GAAP
        on a basis consistent with prior years unless specifically noted
        thereon;

       

      (iii)  With
        the
        statements submitted above, a certificate signed by an officer of Borrower,
        stating he or she is familiar with all documents relating to Lender and that
        no
        Event of Default specified herein, nor any event which upon notice or lapse
        of
        time, or both would constitute such an Event of Default, has occurred, or
        if any
        such condition or event existed or exists, specifying it and describing what
        action Borrower has taken or proposes to take with respect thereto (a
“Compliance Certificate”);

       

      (iv)  Within
        thirty (30) days after the end of each month, a copy of the account statement
        for the Pledged Account for the preceding month, which reflects the current
        market value of the securities held therein; 

       

      (v)  Within
        thirty (30) days after the end of each month, a Borrowing Base Certificate,
        in
        form and substance acceptable to Lender and signed by an officer of Borrower;
        and

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (vi)  Immediately
        upon any officer of Borrower obtaining knowledge of any condition or event
        which
        constitutes or, after notice or lapse of time or both, would constitute an
        Event
        of Default, a certificate of such person specifying the nature and period
        of the
        existence thereof, and what action Borrower has taken or is taking or proposes
        to take in respect thereof.

       

      All
        of
        the statements referred to in (a) above shall be in conformance with generally
        accepted accounting principles and give representatives of Lender access
        thereto
        at all reasonable times, including permission to examine, copy and make
        abstracts from any such books and records and such other information which
        might
        be helpful to Lender in evaluating the status of the loans as it may reasonably
        request from time to time.

       

      (b)  Insurance.
        At its
        own cost, Borrower shall obtain and maintain insurance against (i) loss,
        destruction or damage to its properties and business of the kinds and in
        the
        amounts customarily insured against by companies with established reputations
        engaged in the same or similar business as Borrower and, in any event,
        sufficient to fully protect Lender’s interest in the Collateral, and (ii)
        insurance against public liability and third party property damage of the
        kinds
        and in the amounts customarily insured against by corporations with established
        reputations engaged in the same or similar business as Borrower. All such
        policies shall
        (A)
        be issued by financially sound and reputable insurers, (B) name Lender as
        an
        additional insured and, where applicable, as loss payee under a Lender loss
        payable endorsement satisfactory to Lender, and (C) shall provide for thirty
        (30) days written notice to Lender before such policy is altered or canceled.
        All of the insurance policies required hereby shall be evidenced by one or
        more
        certificates of insurance delivered to Lender by Borrower on the Closing
        Date
        and at such other times as Lender may request from time to time.

       

      (c)  Taxes.
        Borrower shall pay when due all taxes, assessments and other governmental
        charges imposed upon it or its assets, franchises, business, income or profits
        before any penalty or interest accrues thereon, and all claims (including,
        without limitation, claims for labor, services, materials and supplies) for
        sums
        which by law might be a lien or charge upon any of its assets, provided that
        (unless any material item or property would be lost, forfeited or materially
        damaged as a result thereof) no such charge or claim need be paid if it is
        being
        diligently contested in good faith, if Lender is notified in advance of such
        contest and if Borrower establishes an adequate reserve or other appropriate
        provision required by generally accepted accounting principles and deposits
        with
        Lender cash or bond in an amount acceptable to Lender.

       

      (d)  Compliance
        with Laws.
        Borrower shall comply with all federal, state and local laws, regulations
        and
        orders applicable to Borrower or its assets including but not limited to
        all
        environmental laws, in all respects material to Borrower’s business, assets or
        prospects and shall immediately notify Lender of any violation of any rule,
        regulation, statute, ordinance, order or law relating to the public health
        or
        the environment and of any complaint or notifications received by Borrower
        regarding to any environmental or safety and health rule, regulation, statute,
        ordinance or law. Borrower shall obtain and maintain any and all licenses,
        permits, franchises, governmental authorizations, patents, trademarks,
        copyrights or other rights necessary for the ownership of its properties
        and the
        advantageous conduct of its business and as may be required from time to
        time by
        applicable law.

       

      (e)  Depository/Banking
        Services.
        Lender
        shall be the principal depository in which substantially all of Borrower’s funds
        are deposited, and the principal bank of account of Borrower, as long as
        any
        Obligations are outstanding, and Borrower shall grant Lender the first and
        last
        opportunity to provide any business banking services required by Borrower
        and
        its Affiliates.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (f)  Other
        Amounts Deemed Loans.
        If
        Borrower fails
        to
        pay any tax, assessment, governmental charge or levy or to maintain insurance
        within the time permitted or required by this Note, or to discharge any Lien
        prohibited hereby, or to comply with any other Obligation, Lender may, but
        shall
        not be obligated to, pay, satisfy, discharge or bond the same for the account
        of
        Borrower. To the extent permitted by law and at the option of Lender, all
        monies
        so paid by Lender on behalf of Borrower shall be deemed Obligations and
        Borrower’s payments under this Note may be increased to provide for payment of
        such Obligations plus interest thereon.

       

      (g)  Further
        Assurances.
        Borrower shall execute, acknowledge and deliver, or cause to be executed,
        acknowledged or delivered, any and all such further assurances and other
        agreements or instruments, and take or cause to be taken all such other action,
        as shall be reasonably necessary from time to time to give full effect to
        the
        Loan Documents and the transactions contemplated thereby.

       

      8.  NEGATIVE
        COVENANTS.
        Borrower
        covenants with and represents and warrants to Lender that, from and after
        the
        execution date hereof until the Obligations are paid and satisfied in
        full:

       

      (a)  Borrower
        shall not permit the market value of the Pledged Account to be less than
        Three
        Million Five Hundred Thousand and 00/100ths Dollars ($3,500,000.00);
        and

       

      (b)  Borrower
        shall not incur, create, assume or permit to exist any additional indebtedness
        for borrowed money (other than the Obligations) or indebtedness on account
        of
        depositions, advances or progress payments under contracts, notes, bonds,
        debentures or similar obligations or other indebtedness evidenced by notes,
        bonds, debentures, capitalized leases or similar obligations.

       

      9.  DEFINITIONS.
        Certain
        capitalized terms used and not otherwise defined herein have the meanings
        set
        forth in the Security Agreement or in the other Loan Documents. All financial
        terms used herein but not defined in the Security Agreement or any other
        Loan
        Document have the meanings given to them by generally accepted accounting
        principles. All other undefined terms have the meanings given to them in
        the
        Uniform Commercial Code as adopted in the state of Indiana. The following
        definitions are used herein:

       

      (a)  “Advance”
        means a direct advance of funds to Borrower from Lender under and pursuant
        to
        the terms of this Note.

       

      (b)  “Affiliate”
        means, as to Borrower, (i) any person or entity which, directly or indirectly,
        is in control of, is controlled by or is under common control with, Borrower,
        or
        (ii) any person who is a director, officer or employee (A) of Borrower
        or (B) of any person described in the preceding clause (a).

       

      (c)  “Assets”
        means the total of the treasury stock, paid-in surplus, general contingency
        reserves and retained earnings (deficit) of Borrower and any Subsidiary as
        determined on a consolidated basis in accordance with generally accepted
        accounting principles after eliminating all inter-company items and all amounts
        properly attributable to minority interests, if any, in the stock and surplus
        of
        any Subsidiary.

       

      (d)  “Borrowing
        Base” means Ninety Percent (90%) of the market value of the contents of the
        Pledged Account.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e)  "Borrowing
        Base Certificate" means a statement, setting forth the market value of the
        Pledged Account, the current indebtedness under this Note, and a calculation
        showing whether the outstanding balance complies with the Borrowing Base,
        in
        form and substance acceptable to Lender, as the same may be amended from
        time to
        time.

       

      (f)  “Control
        Agreement” means that certain Control Agreement dated of even date herewith and
        executed by Borrower and Fifth Third Securities in favor of Lender.

       

      (g)  “Default
        Rate” means four percent (4.0%) per annum plus
        the Note
        Rate.

       

      (h)  “Liabilities”
        means (i) all items (except items of capital stock, of capital surplus, of
        general contingency reserves or of retained earnings, deferred income taxes,
        and
        amounts attributable to minority interest if any) which in accordance with
        generally accepted accounting principles would be included in determining
        total
        liabilities on a consolidated basis (if Borrower should have a subsidiary)
        as
        shown on the liability side of a balance sheet as at the date as of which
        indebtedness is to be determined; (ii) all indebtedness secured by any mortgage,
        pledge, lien or conditional sale or other title retention agreement to which
        any
        property or asset owned or held is subject, whether or not the indebtedness
        secured thereby shall have been assumed (excluding non-capitalized leases
        which
        may amount to title retention agreements but including capitalized leases);
        and
        (iii) all indebtedness of others which Borrower or any subsidiary has directly
        or indirectly guaranteed, endorse (otherwise than for collection or deposit
        in
        the ordinary course of business), discounted or sold with recourse or agreed
        (contingently or otherwise) to purchase, repurchase, or otherwise acquire,
        or in
        respect of which Borrower or any subsidiary has agreed to apply or advance
        funds
        (whether by way of loan, stock purchase, capital contribution or otherwise)
        or
        otherwise to become directly or indirectly liable.

       

      (i)  "LIBO
        Interest Period" means thirty (30) days, provided that if any LIBO Interest
        Period would otherwise expire on a day which is not a LIBO Rate Banking Day,
        the
        LIBO Interest Period shall be extended to the next succeeding LIBO Rate Banking
        Day except if the next succeeding LIBO Rate Banking Day occurs in the following
        calendar month, then the LIBO Interest Period shall expire on the immediately
        preceding LIBO Rate Banking Day.

       

      (j)  "LIBO
        Rate" means the rate obtained by dividing (1) the actual or estimated per
        annum
        rate, or the arithmetic mean of the per annum rates, of interest for deposits
        in
        U.S. dollars for the LIBO Interest Period, as determined by Lender in its
        discretion based upon information which appears on page LIBOR01, captioned
        British Bankers Assoc. Interest Settlement Rates, of the Reuters America
        Network, a service of Reuters America Inc. (or such other page that may replace
        that page on that service for the purpose of displaying London interbank
        offered
        rates; or, if such service ceases to be available or ceases to be use by
        Lender,
        such other reasonably comparable money rate service as Lender may select)
        or
        upon information obtained from any other reasonable procedure, two (2) LIBO
        Banking Days prior to the first day of each LIBO Interest Period; by (2)
        an
        amount equal to one minus the stated maximum rate (expressed as a decimal),
        if
        any, of all reserve requirements (including, without limitation, any marginal,
        emergency, supplemental, special or other reserves) that is specified on
        the
        first day of each LIBO Interest Period by the Board of Governors of the Federal
        Reserve System (or any successor agency thereto) for determining the maximum
        reserve requirement with respect to eurocurrency funding (currently referred
        to
        as "Eurocurrency liabilities" in Regulation D of such Board) maintained by
        a
        member bank of such System, or any other regulations of any governmental
        authority having jurisdiction with respect thereto, all as conclusively
        determined by Lender. Subject to any maximum or minimum interest rate limitation
        specified herein or by applicable law, the LIBO Rate shall change automatically
        without notice to Borrower immediately on the first day of each LIBO Interest
        Period, with any change thereto effective as of the opening of business on
        the
        day of the change.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (k)  "LIBO
        Rate Banking Day" means any day other than a Saturday or a Sunday on which
        banks
        are open for business in Indianapolis, Indiana, and on which banks in London,
        England, settle payments.

       

      (l)  “Lien”
        means any security interest, mortgage, pledge, assignment, lien or other
        encumbrance of any kind, including interests of vendors or lessors under
        conditional sale contracts or capital leases.

       

      (m)  “Loan
        Documents” means any and all Rate Management Agreements and each and every
        document or agreement executed by Borrower or any other party evidencing,
        guarantying or securing any of the Obligations, including but not limited
        to
        this Note, the Pledge Agreement, and the Control Agreement; and “Loan Document”
        means any one of the Loan Documents.

       

      (n)  “Maturity
        Date” means October 31, 2007.

       

      (o)  “Obligation(s)”
        means all loans, advances, indebtedness and each and every other obligation
        or
        liability of Borrower owed to Lender and any affiliate of Lender, however
        created, of every kind and description whether now existing or hereafter
        arising
        and whether direct or indirect, primary or as guarantor or surety, absolute
        or
        contingent, liquidated or unliquidated, matured or unmatured, participated
        in
        whole or in part, created by trust agreement, lease overdraft, agreement
        or
        otherwise, whether or not secured by additional collateral, whether originated
        with Lender or owed to others and acquired by Lender by purchase, assignment
        or
        otherwise, and including, without limitation, all loans, advances, indebtedness
        and each and every obligation or liability arising under the loan document,
        any
        and all Rate Management Obligations, letters of credit now or hereafter issued
        by Lender or any affiliate of Lender for the benefit of or at the request
        of
        Borrower, all obligations to perform or forbear from performing acts, and
        agreements, instruments and documents evidencing, guaranteeing, securing
        or
        otherwise executed in connection with any of the foregoing, together with
        any
        amendments, modifications and restatements thereof, and all expenses and
        attorneys’ fees incurred by Lender hereunder or any other document, instrument
        or agreement related to any of the foregoing.

       

      (p)  “Pledge
        Agreement” means that certain Security and Pledge Agreement dated of even date
        herewith, executed by Borrower in favor of Lender which grants to Lender
        a
        perfected security interest in a certain investment account Borrower holds
        with
        Fifth Third Securities, as the same may be amended from time to
        time.

       

      (q)  “Pledged
        Account” means that certain securities account number __________________ at
        Fifth Third Securities pledged to Lender as collateral for this Note pursuant
        to
        the Pledge Agreement, which shall contain United States Treasuries and other
        cash equivalents with a market value of not less than Three Million Five
        Hundred
        Thousand and no/100ths Dollars ($3,500,000.00) at any time.

       

      (r)  “Prime
        Rate” means the rate established by the Lender from time to time based on its
        consideration of economic, money market, business and competitive factors,
        and
        it is not necessarily the Lender’s most favored rate. Subject to any maximum or
        minimum interest rate limitation specified herein or by applicable law,
        obligations subject to this rate of interest shall change automatically without
        notice to the Borrower immediately with each change in the Prime
        Rate.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (s)  “Rate
        Management Agreement” means any agreement, device or arrangement providing for
        payments which are related to fluctuations of interest rates, exchange rates,
        forward rates, or equity prices, including, but not limited to,
        dollar-denominated or cross-currency interest rate exchange agreements, forward
        currency exchange agreements, interest rate cap or collar protection agreements,
        forward rate currency or interest rate options, puts and warrants, and any
        agreement pertaining to equity derivative transactions (e.g., equity or equity
        index swaps, options, caps, floors, collars and forwards), including without
        limitation any ISDA Master Agreement between Borrower and Lender or any
        affiliate of Lender, and any schedules, confirmations and documents and other
        confirming evidence between the parties confirming transactions thereunder,
        all
        whether now existing or hereafter arising, and in each case as amended, modified
        or supplemented from time to time.

       

      (t)  “Rate
        Management Obligations” means any and all obligations of Borrower to Lender or
        any affiliate of Lender, whether absolute, contingent or otherwise whether
        now
        or hereafter arising, evidenced or acquired (including all renewals, extensions
        and modifications thereof and substitutions therefore), under or in connection
        with (i) any and all Rate Management Agreements, and (ii) any and all
        cancellations, buy backs, reversals, terminations or assignments of any Rate
        Management Agreement.

       

      (u)  “Subsidiary”
        means any corporation of which Borrower directly or indirectly owns or controls
        at the time outstanding stock having ordinary circumstances (not depending
        on
        the happening of a contingency) voting power to elect a majority of the board
        of
        directors of said corporation.

       

      10.  EVENTS
        OF DEFAULT.
        Upon
        the occurrence of any of the following events (each, an “Event of Default”),
        Lender may, at its option, without any demand or notice whatsoever, cease
        making
        advances and declare this Note and all Obligations to be fully due and payable
        in their aggregate amount, together with accrued interest and all prepayment
        premiums, fees, and charges applicable thereto:

       

      (a)  Any
        failure to make any payment when due of principal or accrued interest on
        this
        Note or any other Obligation and such nonpayment remains uncured for a period
        of
        ten (10) days thereafter.

       

      (b)  Any
        representation or warranty of Borrower set forth in this Note, any Loan Document
        or in any agreement, instrument, document, certificate or financial statement
        evidencing, guarantying, securing or otherwise related to, this Note or any
        other Obligation shall be materially inaccurate or misleading.

       

      (c)  Borrower
        shall fail to observe or perform any other term or condition of this Note
        or any
        other term or condition set forth in any agreement, instrument, document,
        certificate or financial statement evidencing, guarantying or otherwise related
        to this Note or any other Obligation, or Borrower shall otherwise default
        in the
        observance or performance of any covenant or agreement set forth in any of
        the
        foregoing for a period of thirty (30) days.

       

      (d)  The
        legal
        incompetence or dissolution of Borrower, or death of any guarantor, or of
        any
        endorser of the Obligations, or the merger or consolidation of any of the
        foregoing with a third party, or the lease, sale or other conveyance of a
        material part of the assets or business of any of the foregoing to a third
        party
        outside the ordinary course of its business, or the lease, purchase or other
        acquisition of a material part of the assets or business of a third party
        by any
        of the foregoing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (e)  Any
        failure to submit to Lender Borrower’s or any guarantor’s current financial
        information upon request.

       

      (f)  The
        creation of any Lien (except a lien to Lender) on, the institution of any
        garnishment proceedings by attachment, levy or otherwise against, the entry
        of a
        judgment against, or the seizure of, the Pledged Account, or any accounts
        with
        Lender.

       

      (g)  A
        commencement by the Borrower or any endorser or guarantor of the Obligations
        of
        a voluntary case under any applicable bankruptcy, insolvency or other similar
        law now or hereafter in effect; or the entry of a decree or order for relief
        in
        respect of the Borrower or any endorser or guarantor of the Obligations in
        a
        case under any such law or appointing a receiver, liquidator, assignee,
        custodian, trustee, sequestrator (or other similar official) of the Borrower
        or
        any endorser or guarantor of the Obligations, or for any substantial part
        of the
        property of Borrower or any endorser or guarantor of the Obligations, or
        ordering the wind-up or liquidation of the affairs of Borrower or any endorser
        or guarantor of the Obligations; or the filing and pendency for thirty (30)
        days
        without dismissal of a petition initiating an involuntary case under any
        such
        bankruptcy, insolvency or similar law; or the making by Borrower or any endorser
        or guarantor of the Obligations of any general assignment for the benefit
        of
        creditors; or the failure of the Borrower or any endorser or guarantor of
        the
        Obligations generally to pay its debts as such debts become due; or the taking
        of action by the Borrower or any endorser or guarantor of the Obligations
        in
        furtherance of any of the foregoing.

       

      (h)  Nonpayment
        by the Borrower of any Rate Management Obligation when due or the breach
        by the
        Borrower of any term, provision or condition contained in any Rate Management
        Agreement.

       

      (i)  Any
        sale,
        conveyance or transfer of any rights in the Collateral securing the Obligations,
        or any destruction, loss or damage of or to the Collateral in any material
        respect.

       

      11.  REMEDIES.

       

      (a)  Upon
        the
        occurrence of any Event of Default, Lender may declare all sums hereunder
        immediately due and payable, and may foreclose on all Collateral securing
        the
        Obligations, all without further notice to Borrower. In addition to any other
        remedy permitted by law, Lender may at any time, without notice, apply the
        Collateral to this Note or such other Obligations, whether due or not, and
        Lender may, at its option, proceed to enforce and protect its rights by an
        action at law or in equity or by any other appropriate proceedings, provided
        that this Note and the Obligations shall be accelerated automatically and
        immediately if the Event of Default is a filing under the 11 U.S.C. § 101
        et. seq. (the “Bankruptcy Code”). 

       

      (b)  Notwithstanding
        any other legal or equitable rights of Lender, Lender, in the Event of Default,
        is 

       

      (i)  hereby
        irrevocably appointed and constituted attorney-in-fact, with full power of
        substitution, to exercise all rights of ownership with respect to the Collateral
        including, but not limited to, the right to collect all income
        or
        other distributions arising therefrom and to exercise all voting rights
        connected with the Collateral; and 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (ii)  is
        hereby
        given full power to collect, sell, assign, transfer and deliver all of said
        Collateral or any part thereof, or any substitutes therefore, or any additions
        thereto, through any private or public sale without either demand or notice
        to
        Borrower, or any advertisement, the same being hereby expressly waived, at
        which
        sale Lender is authorized to purchase said property or any part thereof,
        free
        from any right of redemption on the part of Borrower, which is hereby expressly
        waived and released to the extent permitted by applicable law. 

       

      (c)  In
        case
        of sale for any cause, after deducting all costs and expenses of every kind,
        Lender may apply, as it shall deem proper, the residue of the proceeds of
        such
        sale toward the payment of any one or more or all of the Obligations of
        Borrower, whether due or not due, to Lender; after such application and the
        return of any surplus, Borrower agrees to be and remains liable to Lender
        for
        any and every deficiency after application as aforesaid upon this and any
        other
        Obligation. Borrower shall pay all costs of collection incurred by Lender,
        including its attorney’s fees, if this Note is referred to an attorney for
        collection, whether or not payment is obtained before entry of judgment,
        which
        costs and fees are Obligations secured by the Collateral.

       

      (d)  Lender’s
        rights and remedies hereunder are cumulative, and may be exercised together,
        separately, and in any order. No delay on the part of Lender in the exercise
        of
        any such right or remedy shall operate as a waiver. No single or partial
        exercise by Lender of any right or remedy shall preclude any other further
        exercise of it or the exercise of any other right or remedy. No waiver or
        indulgence by Lender of any Event of Default shall be effective unless in
        writing and signed by Lender,
        nor
        shall
        a waiver on one occasion be construed as a waiver of any other occurrence
        in the
        future.

       

      12.  LATE
        PAYMENTS; DEFAULT RATE; FEES.
        If any
        payment is not paid when due (whether by acceleration or otherwise) or within
        ten (10) days thereafter, undersigned agrees to pay to Lender a late payment
        fee
        as provided for in any loan agreement or five percent (5%) of the payment
        amount, whichever is greater with a minimum fee of Twenty and no/100ths Dollars
        ($20.00). After an Event of Default, Borrower agrees to pay to Lender a fixed
        charge of Twenty-five and no/100ths Dollars ($25.00), or Borrower agrees
        that
        Lender may, without notice, increase the Note Rate to the Default Rate. Lender
        may impose a non-sufficient funds fee for any check that is presented for
        payment that is returned for any reason. In addition, Lender may charge loan
        documentation fees as may be reasonably determined by the Lender.

       

      13.  PREPAYMENT.
        Borrower may prepay all or part of this Note, which prepaid amounts shall
        be
        applied to the amounts due in reverse order of their due dates. Partial
        prepayments shall not excuse any subsequent payment due.

       

      14.  ENTIRE
        AGREEMENT.
        Borrower agrees that there are no conditions or understandings which are
        not
        expressed in this Note and the documents referred to herein.

       

      15.  SEVERABILITY.
        The
        declaration of invalidity of any provision of this Note shall not affect
        any
        part of the remainder of the provisions.

       

      16.  ASSIGNMENT.
        Borrower agrees not to assign any of Borrower’s rights, remedies or obligations
        described in this Note without the prior written consent of Lender, which
        consent may be withheld in Lender’s sole discretion. Borrower agrees that Lender
        may assign some or all of its rights and remedies described in this Note
        without
        notice to, or prior consent from, the Borrower.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      17.  MODIFICATION;
        WAIVER OF LENDER.
        The
        modification or waiver of any of Borrower’s obligations or Lender’s rights under
        this Note and the Loan Documents must be contained in a writing signed by
        Lender. Lender may perform Borrower’s obligations, or delay or fail to exercise
        any of its rights or remedies, without causing a waiver of those obligations
        or
        rights. A waiver on one occasion shall not constitute a waiver on another
        occasion. Borrower’s obligations under this Note shall not by affected if Lender
        amends, compromises, exchanges, fails to exercise, impairs or releases (a)
        any
        of the obligations belonging to any co-borrower, endorser, or guarantor,
        (b) any of its rights against any co-borrower, guarantor or endorser,
        or
        (c) the Collateral or any other property securing the Obligations.

       

      18.  WAIVER
        OF BORROWER.
        Borrower and any endorser or guarantor hereof hereby waive demand, presentment,
        notice of acceptance, protest and notice of dishonor, notice of protest and
        notice of default. Each of Borrower, including but not limited to all co-makers,
        guarantors and accommodation makers of this Note, hereby waives relief under
        valuation and appraisement laws and all suretyship defenses including but
        not
        limited to all defenses based upon impairment of Collateral and all suretyship
        defenses described in Section 3-605 of the Uniform Commercial Code (the “UCC”).
        Such waiver is entered to the full extent permitted by Section 3-605(i) of
        the
        UCC.

       

      19.  GOVERNING
        LAW; CONSENT TO JURISDICTION.
        This
        Note is delivered in, is intended to be performed in, and will be construed
        and
        enforceable in accordance with and governed by the internal laws of, the
        State
        of Indiana, without regard to principles of conflicts of law. To induce Lender
        to make the loan described herein, Borrower
        irrevocably agrees that all actions arising, directly or indirectly, as a
        result
        or consequence of this Note, any other agreement with Lender, or the Collateral,
        shall be commenced and litigated only in courts having their situs in the
        city
        of Indianapolis, Indiana. Borrower hereby consents to the exclusive jurisdiction
        and venue of any State or Federal court having its situs in said city, and
        waives any objection based on forum
        non conveniens.
        Borrower hereby waives personal service of any and all process and consents
        that
        all such service of process may be made by certified mail, return receipt
        requested, directed to Borrower as set forth herein in the manner provided
        by
        applicable statute, law, rule of court or otherwise.

       

      20.  WAIVER
        OF JURY TRIAL.
        The
        Lender and Borrower, after consulting or having had the opportunity to consult
        with counsel, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT EITHER
        OF
        THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING
        OUT OF
        THIS NOTE OR ANY RELATED INSTRUMENT OR AGREEMENT, OR ANY OF THE TRANSACTIONS
        CONTEMPLATED BY THIS NOTE, OR ANY COURSE OF CONDUCT, DEALING, STATEMENT (WHETHER
        ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. Neither the Lender nor the
        Borrower shall seek to consolidate, by counterclaim or otherwise, any such
        action in which a jury trial has been waived with any other action in which
        a
        jury trial cannot be or has not been waived. These provisions shall not be
        deemed to have been modified in any respect or relinquished by either the
        Lender
        or the Borrower except by a written instrument executed by both of
        them.
        This
        provision is a material inducement to Lender providing financial accommodations
        to Borrower.

       

      IN
        WITNESS WHEREOF, Borrower has executed this Note as of November 2,
        2005.      

       

      BORROWER:

       

      

      INTERACTIVE
        INTELLIGENCE, INC.,

      an
        Indiana corporation

      

      

      By:
        /s/
Stephen
        R. Head   

      Stephen
        R. Head, Chief Financial Officer

      

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

       

      SUBSIDIARIES

       

      Name       Jurisdiction
        of Organization

       

      Interactive
        Intelligence, Inc. International  United
        States

       

      Interactive
        Portal, Inc.     United
        States

       

      Vonexus,
        Inc.      United
        States

       

      Interactive
        Intelligence France S.A.R.L.  France

       

      ININ
        (Australia) Pty Ltd.    Australia

       

      ININ
        UK
        Limited     England

       

      ININ
        Netherlands B.V.    The
        Netherlands

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    SECURITY
      AND PLEDGE AGREEMENT

     

    FOR
      VALUE
      RECEIVED, Interactive
      Intelligence, Inc.(the
      “Pledgor”), hereby transfers, assigns, delivers, sets over, hypothecates and
      pledges to Fifth
      Third Bank (Central Indiana) (“Pledgee”),
      and grants a security interest to Pledgee in all of Pledgor's right, title
      and
      interest in and to shares of stock and other securities held in that certain
      Fifth Third Securities Account # _____________________ (the “Investment
      Account”) with a market value in the sum of not less than Three Million Five
      Hundred Thousand Dollars ($3,500,000.00) (the “Minimum Value”) currently held by
      Fifth Third Securities (the “Broker”), together with any and all “proceeds” (as
      such term is defined in Section 9.1-102 of the Indiana Uniform Commercial Code,
      as amended) thereof (all of the foregoing being referred to herein collectively
      as the “Collateral”), to secure the performance and payment when due of the
      obligations of Pledgor to Pledgee, including but not limited to Pledgor’s
      indebtedness to Pledgee pursuant to a promissory note of even date in the
      original principal sum of Three Million and no/100ths Dollars ($3,000,000.00)
      (the “Note”).

     

    1.  Representations
      and Warranties.
      Pledgor
      warrants and represents to Pledgee that:

     

    (a)  Pledgor
      has and will maintain at all times full and absolute title to and ownership
      of
      the Collateral, free of all security interests, liens, encumbrances, charges,
      claims of third parties and rights of set off or recoupment, except the security
      interests granted pursuant to this Security and Pledge Agreement (this
“Agreement”), and has the right to pledge and subject the Collateral to the
      pledge and security interests herein granted; and

     

    (b)  Pledgor
      has duly executed and delivered this Agreement and it constitutes a legal,
      valid, and binding obligation of Pledgor, enforceable in accordance with its
      terms.

     

    2.  Dividends
      and Voting.
      As long
      as no Event of Default has occurred and is continuing, all dividends upon any
      shares and securities deposited hereunder shall belong to Pledgor, and all
      voting rights incident to such shares and securities shall be vested in Pledgor.
      Should any such Event of Default hereunder occur and be continuing, all
      dividends upon the shares and securities shall be paid to Pledgee to be applied
      to reduce the sums due under the Note, and Pledgee may immediately exercise
      all
      voting rights incident to such shares. Effective with the occurrence and during
      the continuance of an Event of Default, Pledgor hereby irrevocably appoints
      Pledgee as proxy for the shares deposited by Pledgor, acknowledging that such
      appointment is coupled with an interest and that the term of such appointment
      is
      to continue until such time as all shares are sold or returned to Pledgee.
      Except as provided in this paragraph, so long as no Event of Default has
      occurred (as hereinafter defined), Pledgor shall continue to enjoy all rights
      and privileges attendant to Pledgor’s ownership of the Collateral.

     

    3.  Covenants.
      Pledgor
      covenants and agrees that, from and after the date hereof and until the Note
      is
      fully satisfied or the Collateral is otherwise released and delivered to
      Pledgor, without Pledgee's prior written consent:

     

    (a)  Pledgor
      will not: (i) sell, assign, transfer, exchange, convert or otherwise dispose
      of,
      or grant any option with respect to, the Collateral, unless concurrently
      therewith the transferee in any such instance acknowledges this pledge and
      subjects its interest in the Collateral to the interest of Pledgee created
      by
      this Agreement; or such Collateral continues to be maintained with Broker
      subject to Pledgee's security interest; or (ii) take any other action with
      respect to any of the Collateral that would impair the interest or rights of
      Pledgee or Pledgor in, to or under any of the Collateral;

     

    (b)  Pledgor
      will not create, incur or permit to exist any lien with respect to any of the
      Collateral, or any interest therein, except for the lien provided under this
      Agreement; and

     

    (c)  Pledgor
      will not move the Collateral from the Investment Account.

     

    4.  Events
      of Default/Remedies.
      Any of
      the following shall constitute a default (an “Event of Default”) by Pledgor
      under this Agreement: (a) the occurrence of an Event of Default pursuant to
      the
      Note; (b) the market value of the Collateral shall be less than the Minimum
      Value and Pledgor shall have failed to cure within ten (10) days; and (c) breach
      by Pledgor of any covenant, or other provision of this Security Agreement
      following Pledgee’s written notice to Pledgor specifying such breach and
      providing thirty (30) days’ opportunity to cure such breach. During the
      continuance of an Event of Default, Pledgee may itself, or through one or more
      nominees, at its option, sell the Collateral, or any part thereof, at public
      or
      private sale, on 10 days' notice in writing to Pledgor of the time and place
      of
      such sale, and Pledgee shall apply the proceeds of such sale to the payment
      of
      the expenses incident thereto, including reasonable attorney fees, and to the
      payment of all sums due and payable under the Note. The surplus, if any, shall
      be paid over to Pledgor. At the sale of the Collateral, Pledgee may purchase
      the
      whole or any part thereof, by bidding all or a part of the sums due him, and
      receive title thereto free and clear of any claim or demand of Pledgor. Pledgee
      may exercise all rights and remedies of a pledgee and secured party allowed
      by
      applicable law.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.  Monthly
      Reports.
      Within
      ten (10) days after the end of each month, Pledgor shall deliver or have
      delivered to Pledgee a listing identifying the Collateral and reflecting the
      current market value of the Investment Account. In the event a monthly report
      reflects the market value of the Investment Account is less than the Minimum
      Value, Pledgor shall have ten (10) days to cure. After cure, Pledgor shall
      present proof of such cure to Pledgee in the form of an amended monthly
      report.

     

    6.  Termination.
      Upon
      full satisfaction of the Note or such earlier date as Pledgee voluntarily
      releases the Collateral to Pledgor, this Agreement shall terminate.

     

    7.  Successors
      and Assigns.
      This
      Agreement and all obligations of Pledgor hereunder shall be binding upon Pledgor
      and his successors and assigns and shall inure to the benefit of Pledgee and
      its
      respective successors and assigns.

     

    8.  General.
      This
      Agreement shall be governed by the laws of the State of Indiana. Wherever
      possible each provision of this Agreement shall be interpreted in such manner
      as
      to be effective and valid under applicable law, but if any provision of this
      Agreement shall be prohibited by or invalid under such law, such provision
      shall
      be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provision or the remaining provisions of
      this
      Agreement.

     

    9.  Notices.
      All
      notices, requests, demands, claims, and other communications hereunder will
      be
      in writing. Any notice, request, demand, claim, or other communication hereunder
      shall be deemed duly given two business days after it is sent by registered
      or
      certified mail, return receipt requested, postage prepaid, and addressed to
      the
      intended recipient as set forth below:

     

    
      	
              To
                the Pledgee:

               

            	
              Fifth
                Third Bank

               

              251
                N. Illinois Street, Suite 1000

               

              Indianapolis,
                Indiana 46204

               

              Attn:
                Angela Cecil, Vice President

               

            
	
              To
                the Pledgor:

            	
              Interactive
                Intelligence, Inc.

              7601
                Interactive Way

              Indianapolis,
                IN 46278

              Attn:
                Stephen
                R. Head, CFO

            

    

     

        
      Either party may send any notice, request, demand, claim or other communication
      hereunder to the intended recipient at the address set forth above using any
      other means (including personal delivery, expedited courier, messenger service,
      telecopy, telex, ordinary mail, or electronic mail), but no such notice,
      request, demand, claim, or other communication shall be deemed to have been
      duly
      given unless and until it actually is received by the intended recipient. Either
      party may change the address to which notices, requests, demands, claims, and
      other communications are to be delivered by giving the other party written
      notice of same.

     

    10.  Attorney's
      Fees.
      In any
      action or proceeding brought to enforce any provision of this Agreement, or
      where any provision hereof is validly asserted as a defense, the prevailing
      party’s attorney's fees shall be paid by the other party to such action or
      proceeding, in addition to any other remedy provided for in the
      Note.

     

    11.  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original and all of which shall constitute one and the same
      Agreement.

     

    Executed
      and delivered as of this 2nd day of November 2005.

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    PLEDGOR:

    

    By:
      /s/
      Stephen R. Head 

    

    Its:
      CFO   

    

    

    

    PLEDGEE:

    

    FIFTH
      THIRD BANK (Central Indiana)

    a
      Michigan banking corporation

    

    

    By:
      /s/
      Angela Cecil    

    Angela
      Cecil, Vice President

    

     

    

     

    
      
        
        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    CONTROL
      AGREEMENT

     

    Re:
      Account No.     

     

    FIFTH
      THIRD BANK (CENTRAL INDIANA)

     

    Secured
      Party FBO

     

    INTERACTIVE
      INTELLIGENCE, INC.

     

    This
      Agreement refers to the above-referenced and entitled Fifth Third Securities
      (“Securities”) Account (together with any substitution or replacement thereof,
      the “Investment Account”) which the undersigned account holder (the “Account
      Holder”) has instructed Securities to entitle as referenced above and hold
      certain of the Account Holder’s assets. The Account Holder and Securities hereby
      acknowledge and agree that the Investment Account is a cash securities account
      and is not a DVP account, a retirement account or a margin account.

     

    The
      Account Holder and Fifth Third Bank (Central Indiana) (“Secured Party”) hereby
      notify Securities that the Account Holder has granted the Secured Party a
      security interest in the Investment Account, all financial assets and other
      items therein, all proceeds thereof and distributions in connection therewith
      and income received thereon (the “Collateral”) in the minimum face value of
      Three Million Five Hundred Thousand and no/100ths Dollars ($3,500,000.00) (the
      “Minimum Value”) pursuant to a Security and Pledge Agreement dated even date
      herewith made by the Account Holder in favor of the Secured Party (as amended,
      supplemented or otherwise modified from time to time, the “Security Agreement”).
      Securities hereby acknowledges being so notified and confirms that it has
      recorded such security interest on its books and records. Further, Securities
      confirms that as of the date hereof, its personnel generally responsible for
      maintaining records of liens or security interests with respect to customer
      securities accounts, have no knowledge of any restraint, security interest,
      lien
      or other adverse claim in or to the Investment Account or any item therein;
      provided
      that
      Securities may retain a subordinated lien in connection with any obligations
      that Account Holder may have incurred with Securities. In addition, Securities
      agrees to use reasonable efforts to notify the Secured Party and the Account
      Holder in the event it receives any written notice of any lien, encumbrance
      or
      adverse claim against the Investment Account or any of the other
      Collateral.

     

    Absent
      written instructions from the Secured Party to the contrary (see“Notice
      of Exclusive Control” discussed below), the Account Holder shall be authorized
      to operate the Investment Account in accordance with the terms of this Control
      Agreement and the Account Holder's existing agreements with Securities (the
      “Account Agreements”), subject to Secured Party's security interest in the
      Collateral; provided,
      that
      the Account Holder may not withdraw or transfer any Collateral from the
      Investment Account other than in connection with Permitted Trading. “Permitted
      Trading” for purposes of this Control Agreement is the right of the Account
      Holder to sell Collateral in the Investment Account and invest the proceeds
      of
      such sale, as well as other cash available in the Investment Account from time
      to time, in marketable securities, cash or cash equivalents, so long as no
      Collateral is released from the Investment Account as a result of such sale,
      and
      so long as the Minimum Value is maintained at al times. However, the Account
      Holder hereby acknowledges and agrees that the Secured Party's consent to
      Permitted Trading in no way constitutes a waiver of any of its rights under
      the
      Security Agreement and that it is the Account Holder’s obligation to ensure at
      all times that the type and amount of the Collateral in the Investment Account
      meets the maintenance requirements contained in the Security
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
      anything herein to the contrary, upon written notice at any time from the
      Secured Party to Securities (the “Notice of Exclusive Control”): (a) the Account
      Holder shall have no right, and Securities will not permit the Account Holder,
      to trade or in any other manner withdraw or transfer any or all financial assets
      or credit balances in the Investment Account, without the Secured Party’s prior
      written consent in each instance; and (b) Securities shall not accept or honor
      any instructions from or on behalf of the Account Holder in respect of the
      Investment Account, without the Secured Party’s prior written consent.
      Securities agrees that all property in the Investment Account at any time shall
      be treated as a financial asset for purposes of the Uniform Commercial Code
      in
      effect in Indiana as of the date hereof.

     

    The
      Account Holder hereby authorizes Securities to, and Securities shall, provide
      the Secured Party with monthly account statements and trade confirmations when
      issued, and to disclose to the Secured Party such information relative to the
      Investment Account and the financial assets and credit balances therein as
      the
      Secured Party may at any time and from time to time request, without any
      reference to any further authority for, or inquiry as to the justification
      for,
      such disclosure. The parties hereby agree that Securities will provide
      Investment Account information to Secured Party as frequently as Secured Party
      may require to permit it to monitor the Collateral for compliance with the
      Security Agreement.

     

    Securities
      will comply with all entitlement orders originated by the Secured Party without
      further action or consent by Account Holder or any other person and will (1)
      as
      frequently as required in writing by the Secured Party, transfer all available
      credit balances and financial assets in the Investment Account to such account
      as may be designated by the Secured Party by wire transfer, depository transfer
      check, automatic clearing house electronic transfer, or otherwise, as the
      Secured Party may direct in its sole discretion; and (2) maintain the Investment
      Account and all financial assets and other items therein as the Secured Party
      may direct in writing from time to time (including using its best efforts to
      place or negotiate orders to sell securities in the Investment Account,
      including but not limited to sell orders pursuant to stock powers issued in
      favor of Securities, and transferring the proceeds of sale to the Secured Party
      in accordance herewith), in each case until such time (if any) as the Secured
      Party withdraws or rescinds the Notice of Exclusive Control.

     

    Any
      security interest in or lien on the Investment Account or other Collateral,
      as
      defined in this Control Agreement, granted to or otherwise obtained by
      Securities (including, without limitation, setoff rights) shall be junior and
      subordinate to the security interest and lien of the Secured Party in and on
      the
      Investment Account and other Collateral, as defined in this Control Agreement,
      regardless of the order of perfecting any such security interest or lien, the
      filing or absence of filing any financing statement or the taking or failure
      to
      take any other action. Securities acknowledges the Secured Party's perfected
      security interest in the Investment Account and other Collateral, as defined
      in
      this Control Agreement, and agrees that, except as provide herein, it will
      not
      (i) foreclose upon, sell or otherwise dispose of the Investment Account or
      any
      such other Collateral, or exercise any bankers' or other lien or right of setoff
      or similar right in connection with the Investment Account or any such other
      Collateral, in each case without the Secured Party’s prior written consent; or
      (ii) receive, accept or apply any proceeds of the Investment Account or any
      such
      other Collateral to or on account of any indebtedness or obligation of the
      Account Holder to Securities, in each case until the Secured Party has released
      its security interest in the Investment Account and any such other Collateral,
      provided,
      however,
      that
      nothing herein shall limit Securities's right to debit the Investment Account
      in
      payment of its then current commissions, charges and other such fees associated
      with the Investment Account and due to Securities, and from time to time to
      debit the Investment Account in an amount equal to the amount of any deposit
      that Securities has credited to the Investment Account that is thereafter
      returned to Securities because of insufficient funds or is otherwise unpaid.
      Securities shall neither advance margin or other credit against the Investment
      Account, nor hypothecate any financial assets or other items carried in the
      Investment Account, without the prior written consent of the Secured Party.
      Securities shall not agree with any other person or entity that it will comply
      (and Securities shall not comply) with any withdrawal, transfer, payment or
      redemption instruction, or any other entitlement order or other order, from
      such
      person or entity concerning the Investment Account or any financial assets
      or
      other items therein, without the Secured Party’s prior written consent, and any
      such agreement entered into without such consent shall be null and
      void.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      Account Holder acknowledges and agrees that this Control Agreement constitutes
      written notification to Securities with respect to the Secured Party's security
      interest in the Collateral pursuant to Articles 8 and 9 of the Uniform
      Commercial Code in effect in Indiana as of the date hereof and any applicable
      federal regulations for the Federal Reserve Book Entry System. The Account
      Holder and the Secured Party each acknowledges and agree that Securities shall
      not be held responsible for (A) any decline in the market value of the
      Collateral or the failure to notify the Account Holder or the Secured Party
      thereof; or (B) Securities’s failure to take any action with respect to the
      Collateral, except as expressly provided in this Control Agreement, or as
      instructed by the Secured Party to Securities in accordance with this Control
      Agreement (which instructions may be oral followed by written confirmation);
      (C)
      and, except as expressly provided in this Control Agreement, this Control
      Agreement shall not abridge any rights Securities otherwise may have. To the
      extent that any provisions of this Control Agreement conflicts with any
      provisions of the Account Agreements, the provisions of this Control Agreement
      shall control.

     

    Except
      with respect to the obligations and duties expressly provided in this Control
      Agreement, this Control Agreement shall not impose or create any obligations
      or
      duties upon Securities that are greater than or in the addition to the usual
      and
      customary obligations and duties, if any, of Securities with respect to the
      Investment Account or the Account Holder. Except as expressly provide in this
      Control Agreement, Securities shall have no obligation or duty whatsoever to
      interpret the terms of any other agreements between the Account Holder and
      the
      Secured Party or to determine whether any default exists
      thereunder.

     

    The
      Account Holder hereby irrevocably authorizes and instructs Securities to perform
      and comply with the terms of this Control Agreement and to the extent there
      is
      any conflict between the Control Agreement and the Account Agreements, the
      provisions of this Control Agreement will control. The Account Holder hereby
      indemnifies and holds harmless Securities from and against any and all claims,
      actions and suits (whether groundless or otherwise), losses, damages, costs,
      expenses (including reasonable attorney's fees) and liabilities of every nature
      and character arising out of or related to this Control Agreement or the
      transactions contemplated hereby or any actions taken or omitted to be taken
      by
      Securities hereunder, including, without limitation, claims arising out of
      Securities's failure to permit the Account Holder or any other party to withdraw
      funds from the Investment Account other than in strict compliance with the
      terms
      of this Control Agreement, except to the extent directly caused by Securities's
      gross negligence or willful misconduct. The Secured Party shall indemnify and
      hold harmless Securities from and against any and all claims, actions and suits
      (whether groundless or otherwise), losses, damages, costs, expenses (including
      reasonable attorney's fees) and liabilities of every nature and character that
      may result from Securities’s compliance with the Secured Party’s instructions or
      requests as permitted or required under this Control Agreement, except to the
      extent directly caused by Securities’s gross negligence or willful misconduct.
      The foregoing indemnifications shall survive any termination of this Control
      Agreement.

     

    Securities
      may act upon any instrument or other writing believed by it in good faith to
      be
      genuine and to have been signed or presented by a person purporting to be the
      Secured Party or the Account Holder, as the case may be. Securities shall not
      be
      liable in connection with the performance or non-performance of its duties
      hereunder, except for its own gross negligence or willful misconduct.
      Securities's duties shall be determined only with reference to this Control
      Agreement and applicable laws, and Securities shall not be charged with
      knowledge of, or any duties or responsibilities in connection with, any other
      document or agreement. If in doubt as to its duties and responsibilities
      hereunder, Securities may consult with counsel of its choice and shall be
      protected in any action taken or omitted to be taken in connection with the
      advice or opinion of such counsel. Securities shall have no liability to any
      party for any incidental, punitive or consequential damages resulting from
      any
      breach by Securities of its obligations hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    All
      notices required to be given pursuant to this Control Agreement shall be in
      writing and shall be delivered by hand, mailed by United States registered
      or
      certified first class mail, postage prepaid and return receipt requested, or
      sent by overnight courier, addressed to the applicable party at its address
      set
      forth on the signature page hereto or, in each case, to such other address
      for
      notices as any of the parties to this Control Agreement shall last have
      furnished in writing to the other parties hereto in accordance with this
      paragraph. Any such notice or communication shall be deemed to have been duly
      given or made and to have become effective at the time of the receipt thereof
      by
      the party to which it is directed, or when delivery is duly attempted and
      refused.

     

    This
      Control Agreement may not be amended or modified without the prior written
      consent of Securities, the Account Holder and the Secured Party. This Control
      Agreement shall continued in full force until Securities receives written notice
      from the Secured Party terminating this Control Agreement. Upon receipt of
      such
      notice, all Securities’s obligations under this Control Agreement shall cease
      including without limitation, any and all obligations hereunder with respect
      to
      the maintenance of the Investment Account. Thereafter, Securities may take
      such
      steps as the Account Holder may request to vest full ownership and control
      of
      the Investment Account in the Account Holder.

     

    No
      delay
      or omissions by the Secured Party or Securities in exercising any right
      hereunder shall operate as a waiver of such right or of any other right under
      this Control Agreement. No waiver of any right under this Control Agreement
      shall be effective unless in writing and signed by the Secured Party and
      Securities, and no waiver on one occasion shall be construed as a bar to or
      waiver of any such right on any other occasion.

     

    This
      Control Agreement and any waiver or amendment hereto may be executed in
      counterparts and by the parties hereto in separate counterparts, each of which
      when so executed and delivered shall be an original, but all of which shall
      together constitute one and the same instrument. This Control Agreement may
      be
      executed and delivered by telecopier or other facsimile transmission all with
      the same force and effect as if the same were fully executed and delivered
      original manual counterpart.

     

    The
      Control Agreement shall be governed by and construed in accordance with the
      laws
      of the State of Indiana (without giving effect to the conflicts of law
      principles thereof) and shall be binding upon and shall inure to the benefit
      of
      the parties hereto and their respective successors and assigns.

     

    In
      the
      event a provision of this Control Agreement is unenforceable, this agreement
      shall be construed to the extent possible as if the unenforceable provision
      were
      omitted.

     

    Please
      indicate your agreement with the foregoing by signing below and returning this
      Control Agreement to the Secured Party.

     

    ACCOUNT
      HOLDER

    INTERACTIVE
      INTELLIGENCE, INC.

    

    

    By:
      /s/
      Stephen R. Head     Date:
       11/2/05   

    Address:
      7601 Interactive Way, Indianapolis, Indiana 46278

    

    

     

    SECURED
      PARTY

    FIFTH
      THIRD BANK (CENTRAL INDIANA)

    

    

    By:
      /s/ Angela Cecil      Date:
       11/2/05   

    Angela
      Cecil, Vice President

    Address:
      251 N. Illinois Street, Suite 1000, Indianapolis, Indiana 46204

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ACCEPTED
      AND AGREED:

     

    FIFTH
      THIRD SECURITIES

    

    Signature:
       /s/
      Joel Proffitt      Date:
      11/2/05   

     

    Printed
      Name: Joel
      Proffitt     

     

    Title:
      Institutional
      Investments    

     

    Address: 251
      N.
      Illinois Suite 1200    

     

    Indianapolis,
      IN 46204Exhibit 10.16(iv)

    

      Exhibit
        10.16(iv)

       

      AMENDMENT
        NO. 1 TO SUBLEASE

       

      This
        Amendment No. 1 to Sublease is entered into as of the 30th day
        of
        January, 2006, by and between Interactive Intelligence, Inc., an Indiana
        corporation ("Sublandlord"), and ANGEL Learning, Inc., f/k/a Cyberlerning
        Labs,
        Inc., an Indiana corporation ("Subtenant").

       

      W
        I T N E S S E T H:

       

      WHEREAS,
        the
        following facts are true:

       

      A.  Sublandlord
        and Subtenant entered into a Sublease dated as of December 29, 2004 (the
        "Sublease"), pursuant to which Subtenant sublet certain premises located
        in 7601
        Interactive Way, Indianapolis, Indiana;

       

      B.  The
        Sublease provided Subtenant an option to expand the "Premises;"

       

      C.  Subtenant
        desires to exercise its option to expand as provided in the Sublease, but
        as
        modified by this document;

       

      D.  Sublandlord
        has agreed to the modification contained herein.

       

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

       

      1.  Capitalized
        terms used herein but not defined shall have the meaning set forth in the
        Sublease.

       

      2.  Commencing
        on March 1, 2006, the Premises shall consist of approximately 11,980 rentable
        square feet, located on the first floor of the Leased Premises. The Premises
        is
        depicted on the attached Exhibit A.
        Exhibit A
        replaces
Exhibit B
        to the
        Sublease.

       

      3.  Commencing
        on March 1, 2006, and ending on February 28, 2007, Minimum Annual Rent shall
        be
        $192,878.04, payable in Monthly Rental Installments of $16,073.17. Beginning
        on
        March 1, 2007 through the expiration of the Original Term, Minimum Annual
        Rent
        shall be $198,867.96, payable in Monthly Rental Installments of
        $16,572.33.

       

      4.  Sublandlord
        shall provide an allowance for Tenant Finish Improvements in an amount not
        to
        exceed Thirty-Nine Thousand Three Hundred Seventy-Five Dollars ($39,375.00)
        for
        the Expansion Space. The terms of Section 6 of the Sublease shall govern
        such
        allowance. Subtenant confirms that the Tenant Finish Allowance originally
        set
        forth in Section 6 has been paid in full.

       

      5.  Section
        10 of the Sublease is deleted in its entirety.

       

      6.  Section
        11 of the Sublease is deleted in its entirety.

       

      7.  The
        amount of the Security Deposit will be increased to $16,073.17.

       

      8.  In
        all
        other respects, the Sublease shall remain unchanged.

       

      
        
          
             

             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to
        Sublease as of the date and year first above written.

       

      "Sublandlord"

      

      INTERACTIVE
        INTELLIGENCE, INC.

      

      By:
         /s/
        Stephen R. Head

      

      Printed: Stephen
        R. Head 

      

      Title:
         Chief
        Financial Officer 

      

      "Subtenant"

      

      ANGEL
        LEARNING, INC.

      

      By:
         /s/
        Christopher D. Clapp

      

      Printed: Christopher
        D. Clapp 

      

      Title:
         President
        and CEO 

      

      

      

      STATE
        OF
        INDIANA  )

      )SS:
        

      COUNTY
        OF
        MARION )

      

      Before
        me, a Notary Public in and for said County and State, personally appeared
        Stephen R. Head, the Chief Financial Officer of Interactive Intelligence,
        Inc.,
an
        Indiana corporation, who acknowledged the execution of the foregoing "Amendment
        No. 1 to Sublease" on behalf of said corporation.

       

      Witness
        my hand and Notarial Seal this 30th
        day of
        January, 2006.

       

      /s/
        Traci L. Shaw_____________

      Notary
        Public

       

      Traci
        L. Shaw _______________

      (Printed
        Signature)

      

      My
        Commission Expires: 3/14/07___________

      

      My
        County
        of Residence: Marion___________,
        Indiana.

      
        
          
             

             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      STATE
        OF
        INDIANA  )

      )SS:
        

      COUNTY
        OF
        MARION )

      

      Before
        me, a Notary Public in and for said County and State, personally appeared
        Christopher D. Clapp, the President and CEO of CyberLearningLabs, Inc., an
        Indiana corporation, who acknowledged the execution of the foregoing "Amendment
        No. 1 to Sublease" on behalf of said corporation.

       

      Witness
        my hand and Notarial Seal this 30th
        day of
        January, 2006.

       

      /s/
        Traci L. Shaw_____________

      Notary
        Public

       

      Traci
        L. Shaw _______________

      (Printed
        Signature)

      

      My
        Commission Expires: 3/14/07___________

      

      My
        County
        of Residence: Marion___________,
        Indiana.

      
        
          
             

             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      CONSENT
        AND ACCEPTANCE

      

      DUKE
        REALTY LIMITED PARTNERSHIP, an Indiana limited partnership, as Landlord under
        the Master Lease, hereby consents to the Amendment No. 1 to Sublease of the
        Master Lease; provided, however, that such Sublease does not affect or release
        any liability of Sublandlord under the terms and obligations of the Master
        Lease.

      

      Landlord
        hereby further consents to the construction of certain alterations and/or
        improvements within the Subleased Premises in accordance with Exhibit
        D
        attached
        hereto (the “Improvements”) and in accordance with the provisions of
Section
        7.03
        of the
        Master Lease, subject to the following additional terms and conditions.
        Notwithstanding anything contained in Section
        7.03
        or any
        other provision of the Master Lease to the contrary, upon written request
        by
        Landlord, Sublandlord shall remove all said Improvements and restore the
        Subleased Premises to its original condition upon the expiration or earlier
        termination of the Sublease. If any subsequent alterations or improvements
        are
        constructed or installed in the Subleased Premises, Sublandlord or Subtenant
        shall, upon written request from Landlord, upon the expiration or earlier
        termination of the Sublease, remove all such subsequent alterations or
        improvements and restore the Subleased Premises to the condition existing
        prior
        to the construction of such items. Nothing contained herein shall constitute
        a
        consent by Landlord to any alterations or improvements in the Subleased Premises
        other than the Improvements, which may only be made in accordance with the
        provisions of the Master Lease.

      

      This
        Consent and Acceptance of the foregoing Sublease shall not constitute a consent
        by Landlord to any further subletting or assignments of the entire or any
        portion of the Leased Premises.

      

      "Landlord"

      

      DUKE
        REALTY LIMITED PARTNERSHIP, an Indiana limited partnership

      

      By:
         Duke
        Realty Corporation, its general partner

      

      By: /s/
        Jennifer K. Burk 

      Jennifer
        K. Burk

      Senior
        Vice President

      Indiana
        Office

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