The original complaint charges InterVoice and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Company was created through the acquisition of Brite Voice Systems, Inc. (``Brite'') for $164.4 million in cash and stock in the 2ndQ F00. The complaint alleges that during the Class Period, defendants made materially false statements about InterVoice's business, its financial results, the success of its integration with Brite and its prospects. As a result, InterVoice's stock was inflated to as high as $38.75 per share. The Individual Defendants took advantage of this inflation, selling 525,916 shares of their InterVoice stock for $13.4 million in proceeds. Then, on 6/6/00, InterVoice shocked the market, revealing that it would report a loss of $0.03 to $0.05 and revenues of only $67-$68 million for the 1st Q F01 rather than the EPS of $0.22 and revenues of $89 million defendants had led the market to expect. Defendants blamed the shortfall on sales people who had begun leaving the Company in the months prior to this disclosure, some of which were unhappy with the integrated Company. Defendants also claimed they had implemented new guidance from the SEC, Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (``SAB 101'') earlier than planned. These revelation caused InterVoice stock to plummet to as low as $5.75 per share before closing at $6.125, a decline of 85% from its Class Period high on volume of 15.5 million shares.

As summarized by the Company’s FORM 10-Q For The Quarterly Period Ended November 30, 2007, several related class action lawsuits were filed in the United States District Court for the Northern District of Texas on behalf of purchasers of common stock of Intervoice during the period from October 12, 1999 through June 6, 2000 (the “Class Period”). Plaintiffs have filed claims, which were consolidated into one proceeding, under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Securities and Exchange Commission (“SEC”) Rule 10b-5 against us as well as certain named current and former officers and directors of Intervoice on behalf of the alleged class members. In the complaint, Plaintiffs claim that we and the named current and former officers and directors issued false and misleading statements during the Class Period concerning the financial condition of Intervoice, the results of the merger with Brite and the alleged future business projections of Intervoice. Plaintiffs have asserted that these alleged statements resulted in artificially inflated stock prices. The District Court dismissed the Plaintiffs’ complaint because it lacked the degree of specificity and factual support to meet the pleading standards applicable to federal securities litigation. The Plaintiffs appealed the dismissal to the United States Court of Appeals for the Fifth Circuit, which affirmed the dismissal in part and reversed in part. The Fifth Circuit remanded a limited number of issues for further proceedings in the District Court. On September 26, 2006, the District Court granted the Plaintiffs’ motion to certify a class of people who purchased Intervoice stock during the Class Period. On November 14, 2006, the Fifth Circuit granted our petition to appeal the District Court’s decision to grant Plaintiffs’ motion to certify a class. On January 8, 2008, the Fifth Circuit vacated the District Court’s class-certification order and remanded the case to the District Court for further consideration in light of the Fifth Circuit’s decision Oscar Private Equity Investments v. Allegiance Telecom, Inc. The parties have begun the process of presenting additional argument to the District Court regarding class certification. The District Court granted Plaintiffs’ motion for leave to file a second amended complaint and we have moved to dismiss portions of that amended complaint.

On March 12, 2008, Judge Ed Kinkeade denied the defendants' motion to dismiss without prejudice. The defendants' motion for partial judgment on the pleadings was granted in part and denied in part. The parties have engaged in settlement conferences. On September 29, 2009, the parties met, and in good faith attempted to settle the case. Nevertheless, the parties did not reach a settlement.

On October 26, 2009, the plaintiffs’ February 3, 2006 Motion for Class Certification was denied by the Memorandum Opinion and Order signed by Judge Ed Kinkeade. The plaintiffs were granted permission to appeal and filed a Notice of Interlocutory Appeal to the Fifth Circuit on January 29, 2010. The appeal was later dismissed without prejudice. Once again, on March 29, 2010, the Court conducted a settlement conference. The parties met in good faith and attempted to settle the case. Nevertheless, the parties did not reach a settlement.

On June 23, 2011, the plaintiffs filed an unopposed motion for preliminary approval of the settlement. According to the Stipulation of Settlement, the proposed settlement is in the amount of $4,750,000 in cash. The settlement was preliminarily approved on June 30, 2011. The final approval hearing was set for September 27, 2011.

On September 27, 2011, Judge Ed Kinkeade approved the plan of allocation, awarded lead plaintiffs' attorneys' fees and expenses. The settlement is approved, and the action is dismissed with prejudice.