EMPLOYMENT AGREEMENT

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

WITNESSETH:

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

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

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

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

        Section 3.    Title, Services and Duties.    

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

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

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

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

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

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