-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RhzqzOXoehYI3t0b2+t4RkzJ8zDxmGXVcsDSZiWPUlDIoOYgLfwBxm9Sa8aV5jLj cYN9NZbpsiiVRtdKFTQmZw== 0000927946-06-000112.txt : 20060728 0000927946-06-000112.hdr.sgml : 20060728 20060728165828 ACCESSION NUMBER: 0000927946-06-000112 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20060728 DATE AS OF CHANGE: 20060728 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: INTERACTIVE INTELLIGENCE INC CENTRAL INDEX KEY: 0001083318 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 351933097 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-57885 FILM NUMBER: 06988673 BUSINESS ADDRESS: STREET 1: 7601 INTERACTIVE WAY CITY: INDIANAPOLIS STATE: IN ZIP: 46278 BUSINESS PHONE: 3178723000 MAIL ADDRESS: STREET 1: 7601 INTERACTIVE WAY CITY: INDIANAPOLIS STATE: IN ZIP: 46278 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Brown Kyle E CENTRAL INDEX KEY: 0001354090 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: BUSINESS PHONE: 317-590-4246 MAIL ADDRESS: STREET 1: 3653 SOUTH U.S. 421 CITY: ZIONSVILLE STATE: IN ZIP: 46077 SC 13D/A 1 schedule13d.htm SCHEDULE 13D/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 3 )*	OMB APPROVAL
	OMB Number:	3235-0145
	Expires:	February 28, 2009
	Estimated average burden
	Hours per response . . . . . . . 14.5

Interactive Intelligence, Inc.
(Name of Issuer)

Common Stock
(Title of Class of Securities)

45839M 103
(CUSIP Number)

Stephen J. Hackman, Esq.
ICE MILLER LLP
One American Square, Suite 3100
Indianapolis, IN 46282-0200
(317) 236-3400
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)

July 28, 2006
(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box o.

NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Persons who respond to the collection of information contained in this form are not

required to respond unless the form displays a currently valid OMB control number.

CUSIP NO.: 45839M 103

1. Name of Reporting Person. Kyle E. Brown

I.R.S. Identification Nos. of above persons (entities only)

2.            Check the Appropriate Box if a Member of a Group (See Instructions)
                (a) o
                (b) o

3. SEC Use Only

4. Source of Funds (See Instructions)

5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e)

6. Citizenship or Place of Organization

United States

7. Sole Voting Power

0 (See Item 5)

8. Shared Voting Power

9. Sole Dispositive Power

1,646,529

10. Shared Dispositive Power

11. Aggregate Amount Beneficially Owned by Each Reporting Person

12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)

13. Percent of Class Represented by Amount in Row (11)

10.0%

14. Type of Reporting Person (See Instructions)

This Amendment No. 3 to Schedule 13D amends the Schedule 13D filed February 24, 2006, Amendment No. 1 to Schedule 13D filed May 9, 2006 and Amendment No. 2 to Schedule 13D filed June 23, 2006 and relates to the disposition, as reflected in Item 5 below, of 1,750,000 shares of the common stock of Interactive Intelligence, Inc. (the "Issuer") by Ms. Kyle E. Brown (the "Filing Person"), pursuant to a Sales Agency Agreement (the "Sales Agency Agreement") described more fully in Item 6 below. Under the Sales Agency Agreement, the Filing Person sold 1,750,000 shares of Issuer common stock. The shares of Issuer common stock were sold for $12.50 per share (or an aggregate of $21,875,000). The Filing Person will pay Raymond James & Associates, Inc. ("Raymond James") a commission of 4.8% on the sales under the Sales Agency Agreement, leaving the Filing Person with net proceeds of $11.90 per share (or an aggregate of $20,825,000). Following this transaction, the Filing Person beneficially owns 1,646,529 shares of Issuer common stock.

The Filing Person acquired the right to acquire all of the shares of the Issuer's common stock beneficially owned by the Filing Person on February 14, 2006, pursuant to an Agreement of Property Settlement and for Child Custody and Support (the "Settlement Agreement"), which was approved by the Indiana State Superior Court in Boone County on February 14, 2005, in connection with the division of property in divorce proceedings. The Filing Person did not expend any funds in the acquisition of the shares of the Issuer's common stock, but instead acquired the shares from her ex-husband pursuant to the Settlement Agreement. The acquisition of the Issuer common stock pursuant to the Settlement Agreement was reported on the Schedule 13D filed on February 24, 2006, and which was amended twice to report sales of Issuer common stock by the Filing Person with the Amendment No. 1 to Schedule 13D filed May 9, 2006 and the Amendment No. 2 to Schedule 13D filed June 23, 2006.

Item 1.

Security and Issuer.

This Amendment No. 3 to Schedule 13D is being filed with respect to the common stock of the Issuer whose principal executive offices are located at 7601 Interactive Way, Indianapolis, Indiana 46278.

Item 2.

Identity and Background.

The person filing this report is Kyle E. Brown and her principal residence is 3653 South U.S. 421, Zionsville, Indiana 46077. The Filing Person is not currently employed or engaged in an occupation. In the last five years, the Filing Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), nor has she been party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which she was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. The Filing Person is a citizen of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

Not applicable.

Item 4.

Purpose of Transaction.

On July 28, 2006, the Filing Person sold 1,750,000 shares of Issuer common stock which she beneficially owned pursuant to the Sales Agency Agreement described in Item 6 below.

To the extent not prohibited by the "lock-up" provision of the Sales Agency Agreement (discussed more fully in response to Item 6 of this Amendment No. 3 to Schedule 13D), the Filing Person may dispose of her remaining shares of the Issuer's common stock as the market permits directly to one or more purchasers, to or through underwriters, brokers or dealers, through agents on a best-efforts basis or otherwise, or through a combination of such methods of sale, and the Filing Person may sell the shares in one or more transactions at a fixed price or prices, which may be changed, at prevailing market prices at the time of sale or at prices related to such prevailing prices, at varying prices determined at the time of sale, or at negotiated prices. To the extent not prohibited by the "lock-up" provision of the Sales Agency Agreement, the Filing Person may also transfer, devise or gift such common stock.

The Filing Person does not currently have any plans to: (i) acquire any additional securities of the Issuer, (ii) cause any extraordinary corporate transaction, (iii) cause a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries, (iv) cause a change in the present board of directors or management of the Issuer, (v) cause a change in the present capitalization or dividend policy of the Issuer, (vi) cause any other material change in the Issuer's business or corporate structure; (vii) change the Issuer's charter, bylaws or similar instruments in a way that would impede the acquisition of control of the Issuer by any person; (viii) cause a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) cause a class of the Issuer's securities to become eligible for termination of registration pursuant to section 12(g)(4) of the Securities Exchange Act of 1934; or (x) any action similar to the above.

Item 5.

Interest In Securities Of The Issuer.

The Filing Person holds 1,646,529 shares of the Issuer's common stock, or, based on the Issuer's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006, 10.0% of the outstanding shares of common stock. The Filing Person has sole power to dispose or direct the disposition of the shares. Pursuant to Section 23-1-42 of the Indiana Code, these shares are deemed to be "control shares," and are without any voting rights in the hands of the Filing Person, unless and until voting rights are approved by the shareholders of the Issuer. The Filing Person acquired the right to acquire all of the shares of the Issuer's common stock beneficially owned by the Filing Person on February 14, 2006, pursuant to the Separation Agreement (which is described in further detail in the Introduction above). Any subsequent purchaser of the Filing Person's shares of the Issuer's common stock will have voting power with respect to such shares, so long as the acquisition of the shares does not cause the purchaser to hold (in the aggregate with all other shares held by the purchaser) any of the following ranges of voting power in the election of directors: (1) one-fifth or more but less than one-third of all voting power; (2) one-third or more but less than a majority of all voting power; or (3) a majority or more of all voting power.

The Filing Person formerly held 3,396,529 shares of the Issuer's common stock, or, based on the Issuer's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2006, 20.7% of the outstanding shares of common stock. The Filing Person acquired the right to acquire those of the shares of the Issuer's common stock beneficially owned by the Filing Person on February 14, 2006, pursuant to the Settlement Agreement (which is described in further detail in the Introduction to this Amendment No. 3 to Schedule 13D). On May 9, 2006, the Filing Person reported the sale of a combined total of 185,033 shares of Issuer common stock by filing Amendment No. 1 to Schedule 13D. On June 23, 2006, the Filing Person reported the sale of a combined total of 335,173 shares of Issuer common stock by filing Amendment No. 2 to Schedule 13D.

On July 27, 2006, the Filing Person entered into a Sales Agency Agreement with Raymond James providing for the sale of 1,750,000 shares of the Issuer's common stock on July 28, 2006. The shares of Issuer common stock were sold for $12.50 per share (or an aggregate of $21,875,000). The Filing Person will pay Raymond James a commission of 4.8% on the sales under the Sales Agency Agreement, leaving the Filing

Person with net proceeds of $11.90 per share (or an aggregate of $20,825,000). The Sales Agency Agreement provides that the shares may be sold in one or more transactions on terms to be determined by the Filing Person and Raymond James, which were agreed to be one or more block transactions. The sale of Issuer common stock pursuant to the Sales Agency Agreement occurred on July 28, 2006. The Sales Agency Agreement is described more fully in response to Item 6.

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

The Settlement Agreement provides that the ex-husband of the Filing Person must transfer all of the shares of the Issuer's common stock originally reported on the Schedule 13D to the Filing Person, without any contingencies or other conditions.

On July 27, 2006, the Filing Person and Raymond James entered into the Sales Agency Agreement, pursuant to which Raymond James agreed to act as the Filing Person's exclusive selling agent with respect to the 1,750,000 shares of Issuer common stock held by the Filing Person. The Sales Agency Agreement provides that the shares may be sold in one or more transactions on terms to be determined by the Filing Person and Raymond James, which were agreed to be one or more block transactions. The sale of Issuer common stock pursuant to the Sales Agency Agreement occurred on July 28, 2006. The Sales Agency Agreement provides for Raymond James to receive a commission of 4.8% of the sales price on the sales under the Sales Agency Agreement. The Sales Agency Agreement also provides for indemnification of Raymond James by the Filing Person in certain circumstances. The Sales Agency Agreement subjects the Filing Person to a "lock-up" provision which requires the prior written consent of Raymond James for the Filing Person to directly or indirectly, sell, offer or contract to sell or otherwise dispose of or transfer any of the Issuer common stock held by the Filing Person not sold pursuant to the Sales Agency Agreement, or to enter into any swap or other agreement that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of such Issuer common stock held by the Filing Person whether any such swap or transaction is to be settled by delivery of shares of the Issuer's common stock or other securities, in cash or otherwise. This "lock-up" is effective from July 27, 2006 until 90 days after August 2, 2006. The Sales Agency Agreement terminates by its terms on December 31, 2006.

Item 7.

Material to be Filed as Exhibits.

Exhibit 7.1 — Sales Agency Agreement, dated July 27, 2006, between Kyle E. Brown and Raymond James & Associates, Inc.

Exhibit 7.2 — Power of Attorney, dated May 4, 2006, by Kyle E. Brown.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

July 28, 2006

Date

/s/ Kristine J. Bouaichi

Signature

Kristine J. Bouaichi / attorney-in-fact
Name/Title

The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of the filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statement: provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name and any title of each person who signs the statement shall be typed or printed beneath his signature.

Attention: Intentional misstatements or omissions of fact constitute Federal criminal violations (See 18 U.S.C. 1001)

EX-7 2 salesagencyagree.htm EXHIBIT 7.1

SALES AGENCY AGREEMENT

July 27, 2006

RAYMOND JAMES & ASSOCIATES, INC.

880 Carillon Parkway

St. Petersburg, Florida 33716

Dear Sir or Madam:

This agreement (the “Agreement”) sets forth the terms and conditions upon which Kyle E. Brown (the “Selling Stockholder”) has engaged Raymond James & Associates, Inc. (the “Sales Agent”) to serve as the Selling Stockholder’s exclusive agent with respect to the placement of up to 1,750,000 shares (the “Shares”) of common stock, $0.01 par value per share, of Interactive Intelligence, Inc. (the “Company”) currently held by the Selling Stockholder.

The Selling Stockholder and the Sales Agent agree as follows:

1. Agreement to Act as Sales Agent. On the basis of the representations, warranties, covenants and agreements herein contained, but subject to the terms and conditions herein set forth, the Selling Stockholder agrees to sell through the Sales Agent, as exclusive Sales Agent, and the Sales Agent agrees to sell, as Sales Agent for the Selling Stockholder, on a reasonable efforts basis, up to 1,750,000 shares of common stock (the “Maximum Amount”) on the terms set forth herein. The execution of this Agreement by the parties hereto does not constitute a guarantee that the Sales Agent will be able to complete any sales of the Shares, nor shall this Agreement be construed to require the Sales Agent to purchase any Shares for its own account.

2. Delivery. The Shares, up to the Maximum Amount, may be sold in a single transaction, multiple transactions, or otherwise as agreed to between the Selling Stockholder and the Sales Agent. The sales prices for the Shares will be determined by negotiations between the Sales Agent and potential buyers and then presented to the Selling Stockholder. The Selling Stockholder shall have sole discretion to accept or decline each offer by a potential buyer to acquire all or any portion of the Shares. The Selling Stockholder agrees to sell such Shares up to the Maximum Amount through the Sales Agent. As compensation for its services hereunder, the Sales Agent shall receive a commission of 4.8% of the gross price of the Shares sold. After deducting the above-referenced commissions and any further deduction for any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales, the Sales Agent shall remit the net proceeds to the Selling Stockholder for such Shares (the “Net Proceeds”).

The Selling Stockholder or the Sales Agent may, upon notice to the other party hereto by telephone (confirmed promptly by telecopy), suspend the Sales Agent’s efforts hereunder with respect to any unsold Shares; provided, however, that such suspension or termination shall

not affect or impair the parties’ respective obligations with respect to Shares sold hereunder prior to the giving of such notice.

Unless otherwise agreed, settlement for sales of Shares will occur on the third business day following the date on which such sales are made (each a “Closing Date”). The amount of proceeds for such sales to be delivered to the Selling Stockholder against the receipt of the Shares sold shall be the Net Proceeds in respect of such sales. If the Selling Stockholder shall default on its obligation to deliver Shares on any Closing Date, the Selling Stockholder shall, in addition to the provisions of Section 3.6 below, (a) hold the Sales Agent harmless against any loss, claim or damage arising from or as a result of such default by the Selling Stockholder and (b) pay the Sales Agent any commission to which it would otherwise be entitled absent such default.

3. Representations, Warranties and Agreements of the Selling Stockholder. The Selling Stockholder represents and warrants and covenants to the Sales Agent that:

3.1 Due Execution and Delivery. The Selling Stockholder has full power and authority to enter into this Agreement and to carry out all the terms and provisions hereof to be carried out by her. All authorizations and consents necessary for the execution and delivery by the Selling Stockholder of this Agreement have been given. This Agreement constitutes a valid and binding agreement of the Selling Stockholder and is enforceable against the Selling Stockholder in accordance with the terms hereof, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws now or hereafter in effect relating to or affecting creditors’ rights generally or by general principles of equity relating to the availability of remedies.

3.2 Good Title. The Selling Stockholder, at the time of delivery hereunder, will have (a) good and marketable title to the Shares to be sold by such Selling Stockholder hereunder, free and clear of all encumbrances, and (b) full legal right and power, and all authorizations and approvals required by law, to sell, transfer and deliver the Shares to any potential buyer and to make the representations, warranties, covenants and agreements made by such Selling Stockholder herein.

3.3 Consents. No consent, approval, authorization or order of, or any filing or declaration with, any governmental body is required for the consummation by the Selling Stockholder of the transactions on its part contemplated herein.

3.4 Material Adverse Information. The sale of the Shares proposed to be sold by such Selling Stockholder is not prompted by the Selling Stockholder’s knowledge of any material adverse information concerning the Company or the Shares. The Company has not disclosed to the Selling Stockholder information that would constitute material non-public information.

3.5 Failure to Deliver Certificates. In addition to any other rights available to the Sales Agent, if, with respect to each transaction effected pursuant to this Agreement, the Selling Stockholder fails to deliver the Shares to the Sales Agent by the Delivery Date (as defined below), and if after the Delivery Date the Sales Agent purchases (in an open market transaction or otherwise) shares of the Company’s common stock to deliver in satisfaction of

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any transaction effected pursuant to this Agreement, then the Selling Stockholder shall immediately pay in cash to the Sales Agent (in addition to any remedies available to or elected by the Sales Agent) the amount by which (a) the Sales Agent’s total purchase price (including brokerage commissions paid to a third party, if any) for the shares of the Company’s common stock so purchased exceeds (b) the total purchase price for the Shares sold by the Selling Stockholder in the transaction for which the Selling Stockholder failed to make timely delivery (which amount shall be paid as liquidated damages and not as a penalty). “Delivery Date” shall mean the second trading day after Shares have been sold in a transaction pursuant to this Agreement.

3.6 Affiliate. The Selling Stockholder is not an “affiliate” of the Company as such term is defined in paragraph (a)(1) of Rule 144 (“Rule 144”) promulgated by the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) and has not been an affiliate during the preceding three months.

3.7 Holding Period. At least two years (as determined by reference to paragraph (d) of Rule 144) has elapsed since the Selling Stockholder is deemed to have acquired the Shares from the Company and the Shares are fully paid for and nonassessable.

3.8 No Transfer Taxes or Other Fees. There are no transfer taxes or other similar fees or charges under Federal law or the laws of any state, or any political subdivision thereof, required to be paid in connection with the execution and delivery of this Agreement or the sale of the Shares by the Selling Stockholder.

3.9 No Stabilization or Manipulation. The Selling Stockholder has not taken and will not take, directly or indirectly, any action which is designed to or which has constituted or which might reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Shares.

3.10 Experience. The Selling Stockholder, together with her advisors, is knowledgeable and experienced in making, and is qualified to make, decisions with respect to investments in, or sales of, securities, such as the decision involved in the transaction contemplated by this Agreement. The Selling Stockholder has had an opportunity to discuss this Agreement with her advisors and with her advisors has considered the merits and risks related to the transaction contemplated by this Agreement. The Selling Stockholder is an “accredited investor” within the meaning of Rule 501(a) promulgated under the Securities Act.

3.11 Lock-up. During the period beginning on the date hereof and ending on the date 90 days after each Closing Date, without the prior written consent of Raymond James & Associates, Inc., the Selling Stockholder will not, (i) directly or indirectly, sell, offer or contract to sell or otherwise dispose of or transfer any of the Shares not sold pursuant to this Agreement, or (ii) enter into any swap or other agreement that transfers, in whole or in part, directly or indirectly, the economic consequences of ownership of the Shares whether any such swap or transaction is to be settled by delivery of shares of the Company’s Common Stock or other securities, in cash or otherwise.

4. Indemnification. (a) The Selling Stockholder agrees to indemnify and hold harmless the Sales Agent, the directors, officers, employees and agents of the Sales Agent and

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each person, if any, who controls the Sales Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all investigative, legal and other expenses reasonably incurred in connection with, and any and all amounts paid in settlement of, any action, suit or proceeding between any of the indemnified parties, on the one hand, and any indemnifying parties, on the other hand, or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when incurred, to which the Sales Agent, or any such person, may become subject under the Securities Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based on (i) breach of any representation, warranty, covenant or agreement made by the Selling Stockholder herein, or (ii) the engagement of the Sales Agent pursuant to, and the performance by the Sales Agent of the services contemplated by, this Agreement; provided that this indemnity agreement shall not apply (x) to the extent that such loss, claim, liability, expense or damage is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of the Sales Agent or (y) to any matter for which the Sales Agent agrees to indemnify the Selling Stockholder under Section 4(c) of this Agreement. This indemnity agreement will be in addition to any liability that the Selling Stockholder might otherwise have.

(b) If the Sales Agent proposes to assert the right to be indemnified under this Section 4, the Sales Agent will, promptly after receipt of notice of commencement of any action against such Sales Agent in respect of which a claim is to be made against the Selling Stockholder under this Section 4, notify the Selling Stockholder of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify the Selling Stockholder will not relieve the Selling Stockholder from (i) any liability that it might have to any indemnified party otherwise than under this Section 4 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 4 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the Selling Stockholder. If any such action is brought against any indemnified party and it notifies the Selling Stockholder of its commencement, the Selling Stockholder will be entitled to participate in and, to the extent that it elects, by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, to assume the defense of the action, with counsel satisfactory to the indemnified party, and after notice from the Selling Stockholder to the indemnified party of its election to assume the defense, the Selling Stockholder will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party at the request of the Selling Stockholder in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the Selling Stockholder, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the Selling Stockholder, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the Selling Stockholder (in which case

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the Selling Stockholder will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the Selling Stockholder has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the Selling Stockholder. It is understood that the Selling Stockholder shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. The Selling Stockholder will not be liable for any settlement of any action or claim effected without her written consent (which consent will not be unreasonably withheld).

(c) In addition to all other covenants and agreements of the Sales Agent set forth in this Agreement, the Sales Agent covenants and agrees with the Selling Stockholder, (i) to be registered and in good standing as a broker/dealer with the Commission and each state where the Sales Agent may be required to be registered and in good standing in order to place the Shares in accordance with this Agreement; (ii) to comply in connection with its activities under this Agreement with all applicable requirements of the Securities Act and the Exchange Act, the rules and regulations issued thereunder, any applicable state securities laws and the rules and regulations thereunder, and the regulations of the NASD; and (iii) not to make any untrue statements of a material fact or omit to state any material fact necessary to be stated, to make statements made by the Sales Agent (in light of the circumstances under which they are made and the total mix of information concerning the Company and the Shares that is then publicly available on the basis of disclosures that have been made by the Company) not misleading. The Sales Agent agrees to indemnify and hold harmless the Selling Stockholder from and against any and all losses, claims, liabilities, expenses and damages (including without limitation those of a type or nature described by Section 4(a), as and when incurred, to which the Selling Stockholder may become subject, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based upon any breach of any representation, warranty, covenant, or agreement made by the Sales Agent herein; provided that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of the Selling Stockholder. This indemnity agreement shall be in addition to any liability that the Sales Agent might otherwise have.

(d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 4 is applicable in accordance with its terms but for any reason is held to be unavailable from the indemnifying party, the indemnifying party will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted) to which the indemnifying party and the indemnified party may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the indemnifying party on the one hand and the indemnified party on the other. The relative benefits received by the Selling Stockholder on the one hand and the Sales Agent

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on the other hand shall be deemed to be the same proportion as the total net proceeds from the sale of Shares (before deducting expenses) received by the Selling Stockholder bear to the total compensation (before deducting expenses) received by the Sales Agent from the sale of Shares on behalf of the Selling Stockholder. If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, as well as any other relevant equitable considerations. The Selling Stockholder and the Sales Agent agree that it would not be just and equitable if contributions pursuant to this Section 4(c) were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense or damage or action in respect thereof, referred to above in this Section 4(c) shall be deemed to include, for the purpose of this Section 4(c), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the foregoing provisions of this Section 4(c), the Sales Agent shall not be required to contribute any amount in excess of the commissions received by it under the Agreement, and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4(c), any person who controls a party to this Agreement within the meaning of the Securities Act and any officers, directors, employees or agents of the Sales Agent, will have the same rights to contribution as that party. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 4(c), will notify any such party or parties from whom contribution may be sought, but the omission so to notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 4(c). Except for a settlement entered into pursuant to the last sentence of Section 4(b) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent (which consent will not be unreasonably withheld).

5. Termination. This agreement shall expire on December 31, 2006 unless extended by mutual written consent of both parties.

6. Conditions Precedent to Sale. Each sale of Shares pursuant to this Agreement shall be subject to: (a) the Selling Stockholder having furnished to the Sales Agent such appropriate further information, certificates and documents as the Sales Agent may reasonably request; and (b) receipt by the Sales Agent of a legal opinion in form and substance satisfactory to the Sales Agent.

7. Independent Parties. The Selling Stockholder acknowledges and agrees that: (i) the sale of the Shares pursuant to this Agreement, including the determination of the transaction price and any related discounts and commissions, is an arm’s-length commercial transaction between the Selling Stockholder, on the one hand, and the Sales Agent, on the other hand, and the Selling Stockholder is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement; (ii) in connection with the transaction contemplated hereby and the process leading to such

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transaction the Sales Agent has been acting solely as a principal and is not the financial advisor, agent or fiduciary of the Selling Stockholder; (iii) the Sales Agent has not assumed and will not assume an advisory, agency or fiduciary responsibility in favor of the Selling Stockholder with respect to any of the transactions contemplated hereby or the process leading thereto and the Sales Agent has no obligation to the Selling Stockholder with respect to the transactions contemplated hereby except the obligations expressly set forth in this Agreement; (iv) the Sales Agent and its affiliates may be engaged in a broad range of transactions and relationships, including transactions in the Company’s common stock or transactions involving the Company, that involve interests that differ from those of the Selling Stockholder and that the Sales Agent has no obligation to disclose information relating to, or arising out of, such transactions or relationships by virtue of any advisory, agency or fiduciary relationship; and (v) the Sales Agent has not provided any legal, accounting, regulatory or tax advice with respect to the transactions contemplated hereby and the Selling Stockholder has consulted its own legal, accounting, regulatory and tax advisors to the extent she deemed appropriate.

8. Notices. Notice given pursuant to any of the provisions of this Agreement shall be in writing and, unless otherwise specified, shall be mailed or delivered (a) if to the Selling Stockholder, at 3653 South U.S. 421, Zionsville, Indiana 46077, fax (317) 873-4092, with a copy to Kristine J. Bouaichi, Ice Miller LLP, One American Square, Suite 3100, Indianapolis, Indiana 46282-0200, fax (317) 592-4842 or (b) if to the Sales Agent, at the office of Raymond James & Associates, Inc., 880 Carillon Parkway, St. Petersburg, Florida 33716, Attention: John Critchlow. Any such notice shall be effective only upon receipt. Any notice under Section 7 may be made by facsimile or telephone, but if so made shall be subsequently confirmed in writing.

9. Survival. The respective representations, warranties, agreements, covenants, indemnities and other statements of the Selling Stockholder set forth in this Agreement or made by or on its behalf pursuant to this Agreement shall remain in full force and effect, regardless of (i) any investigation made by or on behalf of the Selling Stockholder, any of its officers or directors, the Sales Agent or any controlling person referred to in Section 4 hereof and (ii) delivery of and payment for the Shares. The respective agreements, covenants, indemnities and other statements set forth in the last paragraph of Section 2, Section 3.6, Section 4, Section 9 and Section 11 hereof shall remain in full force and effect, regardless of any termination or cancellation of this Agreement.

10. Successors. This Agreement shall inure to the benefit of and shall be binding upon the Sales Agent, the Selling Stockholder and their respective successors, heirs, personal representatives and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person except that the indemnification contained in Section 4 of this Agreement shall also be for the benefit of the directors, officers, employees and agents of the Sales Agent and any person or persons who control the Sales Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.

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11. Applicable Law. The validity and interpretations of this Agreement, and the terms and conditions set forth herein, shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to any provisions relating to conflicts of laws.

12. Consent to Jurisdiction. The Selling Stockholder irrevocably consents to the jurisdiction of the courts of the State of New York and of any federal court located in such State in connection with any action or proceeding arising out of, or relating to, this Agreement, any document or instrument delivered pursuant to, in connection with, or simultaneously with this Agreement, or a breach of this Agreement or any such document or instrument. In any such action or proceeding, the Selling Stockholder waives personal service of any summons, complaint, or other process and agrees that service thereof may be made in accordance with Section 7.

13. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures shall be deemed original signatures.

14. Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto as to the matters covered hereby and supersedes all prior understandings, written or oral, relating to such subject matter.

Each party hereby indicates its agreement to the foregoing by executing this Agreement in the space provided below.

Very truly yours,

SELLING STOCKHOLDER

KYLE E. BROWN

/s/ Kyle E. Brown

Confirmed as of the date first

above mentioned:

RAYMOND JAMES & ASSOCIATES, INC.

By: /s/ Scott B. Cook

Name: Scott B. Cook

Title: Senior Managing Director, Corporate Syndicate

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EX-7 3 poaschedule13d.htm EXHIBIT 7.2

POWER OF ATTORNEY

Know all by these presents, that the undersigned hereby constitutes and appoints each of Stephen J. Hackman, Kristine J. Bouaichi and Stacy S. Kilian signing singly, the undersigned's true and lawful attorney-in-fact to:

(1)

execute for and on behalf of the undersigned, in the undersigned's capacity as an officer, director and/or 5% Shareholder of Interactive Intelligence, Inc. (the "Company"), Schedule 13D, Schedule 13G and any amendments to Schedule 13D and Schedule 13G in accordance with Section 13 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder;

(2)

do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Schedule 13D, Schedule 13G and any amendments to Schedule 13D and Schedule 13G and timely file such schedule or form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and

(3)

take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion.

The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving such capacity at the request of the undersigned are not assuming, nor is the Company assuming, any of the undersigned's responsibilities to comply with Section 13 of the Securities Exchange Act of 1934, as amended.

This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Schedule 13D, Schedule 13G and any amendments to Schedule 13D and Schedule 13G with respect to the undersigned's holdings of and transactions in securities issued by the Company, unless either revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 9th day of May, 2006.

/s/ Kyle E. Brown

Signature

Kyle E. Brown

Printed Name

STATE OF INDIANA

)

SS:

COUNTY OF MARION

)

Subscribed to and sworn before me, a Notary Public, in and for said County and State, this 9th day of May, 2006.

/s/ Connie L. Keatts

Signature

Connie L. Keatts

Printed Notary Public

My Commission Expires:

Mar. 17, 2009

County of Residence:

Marion

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