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STATE OF SOUTH CAROLINA

)

) COUNTY OF GREENVILLE

) )

In re International Textile Group Merger Litigation

)

IN THE COURT OF COMMON PLEAS

c.A. No. 2009-CP-23-3346

ANSWER AND DEFENSES OF DR. DANIEL TESSONI ANSWER AND DEFENSES

Defendant, Dr. Daniel Tessoni, by and through his undersigned counsel, answers the Amended Consolidated Complaint in this matter, as follows:, INTRODUCTION

Defendant answers the Amended Consolidated Complaint upon his knowledge or upon information and belief.

Defendant denies each and every allegation of Plaintiffs' Amended

Consolidated Complaint not herein specifically admitted, qualified, modified, or explained. Defendant further states in response to the allegations of Plaintiffs' Amended Consolidated Complaint that: 1.

To the extent any fiduciary duties were owed, Defendant did not breach them

with respect to merger of International Textile Group, Inc. ("FITG") and Safety Components International, Inc. ("SCI"), or otherwise. To the contrary, a business plan was executed that was endorsed by the textile industry, the companies' customers, the investing public, and, most notably, SCI's minority shareholders.

Indeed, Menezes and FURSA, two of SCI's largest

minority shareholders, ratified the merger of SCI and FITG in the most critical way-they invested in it. 2.

Menezes, the former CFO and interim CEO of SCI, was part of the merger

planning from the very beginning and, after he was terminated by SCI, still invested approximately $1 million in SCI knowing that the merger was in the works. Likewise, after

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learning about the merger, FURSA-a hedge fund with more than $1.5 billion in managed assets--eontacted Wilbur Ross to advise him that it saw "the strategic rationale for the deal" and that "it certainly makes sense to create a larger, more diversified company by combining the two companies." FURSA, putting its money where its mouth was, then purchased approximately 72,000 additional shares of SCI and the combined company ("NITG"), a 20% increase in FURSA's position. 3.

Why did Menezes and FURSA increase their holdings in SCI after learning about

the merger with FITG? Because the merger made good business sense and they knew Wilbur Ross's ability to reform and reorganize poor performing companies and turn them into gold. 4.

Mr. Ross, through his private equity management company, W.L. Ross & Co,

LLC ("WLR"), was enjoying a well publicized, record breaking year in 2006 thanks to the successful implementation of WLR's investment strategy-identifying high risk, out of favor industries and distressed companies and restructuring them to create value. For example, WLR had taken bankrupt steel companies, restructured and reorganized them into a new entity, International Steel Group, and made tremendous profits with this investment for his investors and the associated portfolio companies' shareholders. At the time of the merger of SCI and FITG, WLR Recovery Fund II, L.P. ("Fund II"), the private equity fund that controlled the majority of shares of FITG, had an internal rate of return of over 100% and had distributed more than $700 million to its investors. At the same time, WLR Recovery Fund III, L.P. ("Fund III"), a $1.1 billion fund launched in June 2005 that held the majority of shares of SCI, was also off to a strong start, posting an internal rate of return of approximately 70%. 5.

On information and belief as to these matters, thanks to the success of Fund II and

the launch of Fund III, AMVESCAP PLC (n/kJa Invesco, Ltd.) ("Invesco") sought to acquire

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WLR in the Fall of 2005 and signed a definitive agreement on July 22, 2006. Invesco purchased WLR because of its historically strong performance and good synergies that it presented. The deal was conceived of and concluded long before-and independent from-the merger of SCI and FITG. Invesco's purchase was shrewd. Even though SCI, FITG, and the combined entity underperformed, WLR still raised billions of dollars in private equity as part of Invesco. 6.

Before the merger, SCI faced an uncertain future, was performing poorly, and

badly needed the merger to address its ongoing financial and customer problems: A.

SCI had been continuously on the market since June 2004 and attracted

very little interest. SCI hired a financial advisor to peddle the company and, despite contacting more than 50 strategic potential buyers, only one was interested enough to make a preliminary offer and conduct due diligence. But that potential buyer cut its offer nearly in half after reviewing SCI's declining financial performance and alarming loss of market share. By the end of July 2005, SCI's EBITDA projections had declined to such an extent that SCI's CEO admitted that subjecting the company to an auction process was not advisable. Soon, only distressed, high-risk investors like WLR were interested in acquiring SCI. B.

SCI's EBITDA declined sharply from 2004 through 2006, falling by 50%

each year. Indeed, in the quarter before the merger closed, SCI posted an operating loss of approximately $2.5 million, and had a 2006 year end EBITDA of about $4 million, nearly $15.5 million less than projected. In fact, an outside consultant hired by Menezes in 2006 concluded SCI was in a "death spiral." Even more troubling, Menezes seemed to have no plan to reverse these earnings problems. C.

SCI's market position was also eroding. SCI lost contracts not only due to

program phase outs, but was also losing market share to lower cost providers with superior

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equipment and pricing. Moreover, SCI's ongoing product quality issues created tremendous customer relationship problems that had SCI ranked dead last in service by one of its principal customers. Menezes exacerbated the problem while interim CEO by taking extreme positions due to his unfamiliarity with technical issues. He so antagonized his largest customers that Wilbur Ross had to make special trips to their CEOs to salvage the situation. D.

John Corey, the former CEO of SCI, abruptly resigned approximately two

weeks after the majority stake in SCI was purchased by Fund III. Corey's resignation was unexpected, as he and Menezes pocketed $1.4 million and $620,000, respectively, in bonuses that were partly designed to induce them to remain with SCI. After Corey's resignation, Menezes was named interim CEO in addition to his CFO duties, but proved to be unsuitable for the job and was terminated. E.

As discussed above, even with its unlevered balance sheet, SCI was

unappealing to buyers. SCI's available debt was also insufficient for its needs and could not support meaningful acquisitions or entry into necessary growth markets, like one piece weaving ("OPW") technology. SCI's declining earnings and alienation of its customers virtually assured that its debt availability would have shrunk over time. 7.

Because of SCI's troubles, its management and minority shareholders were

undoubtedly excited about WLR's plan to merge it with FITG.

In fact, I, SCI's minority

shareholder representative, agreed to the sale of SCI's majority block in part because of Mr. Ross's track record in consolidating businesses and his intent to vertically integrate SCI. The desired vertical integration began with the merger of SCI and FITG, and continued in 2007 with the contribution of a third textile manufacturer, BST.

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8.

In addition to vertical integration, SCI enjoyed many more benefits from the

merger. The merger provided SCI a desperately needed CEO, CFO, and other experienced managers. FITG management, using their far greater technical know-how, solved SCI's quality problems that were interfering with sales to Europe; improved and grew SCI's technical fabric business; and modernized SCI's equipment. FITG management also implemented long overdue rationalization and streamlining of SCI's Mexican and German facilities, saving millions of dollars. 9.

Through the merger, SCI realized millions of dollars in cost saving synergies that

continued to grow after BST was contributed to NITG. SCI further benefited from FITG's tax credits and improved stop-loss insurance levels. 10.

SCI also was instantly diversified by the merger. SCI became part of a much

larger company, joining well known and respected textile manufacturers Burlington Industries and Cone Mills, and leveraged economies of scale with suppliers. 11.

Simply put, SCI needed and benefited from the merger more than FITG.

12.

The merger of SCI and FITG was arrived at through arm's length dealing between

two separate special committees. I was a member of the SCI special committee. Interested directors and management were walled off from any involvement with the financial terms of the deal. The dual special committee structure not only insured that the merger was fair, but now requires that the special committees' collective determination be examined under the deferential business judgment rule standard. 13.

Even if the merger is subject to a more exacting standard of review, the process

still easily passes muster as the SCI special committee was independent and authoritative. I was the longest-serving SCI director-who was appointed by SCI's previous owners and directors-

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had no relationship with WLR or its affiliates. I was also was SCI's "Continuing Director" and expressly authorized by SCI's charter to approve interested stockholder transactions like the merger. In fact, I had previously worked on a similar one-man special committee during SCI's arduous sale process. As SCI's Continuing Director, I was uniquely positioned to approve, broker, or veto the merger because under the express terms of SCI's Certificate of Incorporation, he could not be replaced by a controlling shareholder without his own approval. 14.

The SCI special committee was first brought in at the behest of Menezes and

SCI's corporate counsel when preliminary merger discussions began. The special committee's first act was to demand that FITG sign a confidentiality agreement before reviewing any nonpublic SCI information. Then it imposed a 30-day time limit in which FITG was to investigate a possible transaction with SCI and, if a transaction was to be pursued, required that the SCI Board of Directors create a new special committee to review, evaluate, investigate, negotiate, and approve that transaction. 15.

After SCI's Board of Directors formed the merger special committee, the SCI

special committee retained its own independent advisors and worked on its own time table, taking several weeks to make extensive revisions to the proposed merger agreement and bargaining so aggressively that at one point it broke off negotiations. The strategy worked. Merger negotiations resumed after WLR capitulated to the SCI's special committee's demands. 16.

I with the help of my advisors negotiated down the post-merger ownership split

from FITG's special committee's unfavorable initial demands of 72% (for FITG)/28% (for SCI), 70/30%, and 67/33%.

I finally extracted an exchange ratio of 65/35 while simultaneously

securing a 70% discount on the appraised value of FITG's significant off-balance sheet assets. FITG's special committee advisors admitted afterward that they had hoped to get a better deal.

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17.

I continued to exert my independence even after the exchange ratio was agreed

upon in principle, refusing to provide SCI's interested directors with its advisor's detailed financial analysis until the merger was approved and the agreement was signed. Wilbur Ross, who had requested these materials, respected this decision, understanding that he could not interfere with the special committee's independent decisions concerning the merger exchange ratio. Indeed, no one affiliated with WLR played any role negotiating the merger price. 18.

I did not breach any fiduciary duties, commit corporate waste, or engage in some

vague conspiracy to harm SCI's minority shareholders. On information and belief as to these matters, Funds II and III invested hundreds of millions of dollars in NITG in the belief that its business model would be successful.

Like Menezes, FURSA, and the other minority

shareholders, Funds II and III understood the risks involved in this investment, but hoped that NITG would succeed and increase stockholder value. The downturn in the economy has delayed NITG's plans, but I still expect it to correct itself and reward its shareholders' patience and faith. Plaintiffs, on the other hand, want a guarantee for their investment, seeking to be the only shareholders to profit from this investment. But Plaintiffs cannot avoid the risks they knowingly took. The merger was fair, the price was fair, and Plaintiffs' Monday morning quarterbacking does not change that fact. GENERAL DENIAL

19.

Defendant Tessoni denies any wrongdoing or improper conduct of any type as

alleged by Plaintiffs. AFFIRMATIVE DEFENSES

FIRST DEFENSE Defendant responds to the individual paragraphs of the Amended Consolidated Complaint as follows:

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20.

Defendant states that the section entitled "contents" is not subject to an admission

or denial.

To the extent a response is possible, Defendant admits that Plaintiffs Brian P.

Menezes; FURSA Alternative Strategies LLC; FURSA Master Global Event Driven Fund, LP; Ramius Securities, LLC; Ramius Credit Opportunities Master Fund, Ltd.; Kirk Wortman; Joseph Asiaf; Marilyn Asiaf, and Juanita Marett are named as Plaintiffs in this action and that Brian P. Menezes; FURSA Alternative Strategies LLC; and FURSA Master Global Event Driven Fund, LP (collectively, "FURSA") were minority shareholders of Safety Components International, Inc. ("SCI") before it merged with International Textile Group, Inc. ("FITG") and became a new combined company ("NITG"). Defendant further admits that Wilbur L. Ross, Jr.; Michael 1. Gibbons; David H. Storper; David L. Wax; Gary L. Smith, Joseph L. Gorga; Daniel D. Tessoni; Stephen B. Duerk; WL Ross & Co. LLC ("WLR"); WLR Recovery Fund II, L.P. ("Fund II"); WLR Recovery Fund III, L.P. ("Fund III"); WLR Recovery Associates II LLC ("Associates II"); WLR Recovery Associates III LLC ("Associates III"), and RSM EquiCo Capital Markets LLC (n/k/a McGladrey Capital Markets, LLC) ("RSM") are Defendants in this matter, and that NITG is the nominal defendant is this matter. Defendant further admits that Wilbur L. Ross is CEO of WLR, chairman of NITG's board, and has been chairman of the boards of SCI and FITG. Defendant further admits that Associates II is the general partner of Fund II and that Associates III is the general partner of Fund III. Defendant further admits that Michael 1. Gibbons is CFO of WLR, is a director of NITG, and has been a director of SCI. Defendant further admits that David H. Storper is a senior managing director of WLR, is a director of NITG, and has been a director of SCI. Defendant further admits that David L. Wax is a managing director of WLR, is a director of NITG, and has been a director of FITG. Defendant further admits that Joseph L. Gorga is a director and CEO of NITG, was CEO of FITG, and has been a director of SCI and

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FITG. Defendant further admits that he is a director of NITG, and has been a director of SCI. Defendant further admits that Stephen B. Duerk was President of SCI. Defendant further admits that Gary L. Smith was a director and CFO of FITG and NITG. Defendant further admits that RSM was the financial advisor for the SCI special committee that reviewed, investigated, negotiated, and approved the merger of SCI and FITG.

Defendant further admits that SCI

special committees waived a standstill provision so that affiliates of WLR could purchase SCI and so that a transaction between SCI and FITG could be explored. Defendant further admits that WLR provided the special committees of FITG and SCI with a proposal to merge those two companies. Defendant further admits that SCI's special committee recommended approving the merger of FITG and SCI to the SCI Board and that the Board, in reliance on that recommendation, approved the merger. Defendant further admits that the merger of FITG and SCI closed on October 20, 2006. Defendant denies that FITG was failing, that he was acutely aware of it failing, or that it needed SCI's liquidity to keep FITG from failing. Defendant further denies that they disregarded risks to SCI. Defendant further denies that there was any "coopting" of me-whatever that means--or that there was a problematic basis for the second standstill waiver. Defendant further denies that SCI was not authorized to conduct diligence on FITG. Defendant further denies that Ross directed that SCI acquire FITG to avoid spending cash to buyout SCI's minority shareholders. Defendant further denies that the SCI special committee for the merger was fatally flawed. Defendant further denies that there was pressure on me to select RSM as its financial advisor. Defendant further denies that the merger agreement was unfair to SCI.

Defendant further denies that FITG or WLR improperly communicated with

RSM. Defendant further denies that the value of SCI or NITG collapsed because of the merger. Defendant further denies that the new credit facility or debt for equity swap were negative

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consequences of the merger. Except as expressly admitted and denied, Defendant states that the remaining allegations in the section entitled "contents" are so vague and ambiguous that Defendant is without knowledge or information to form a belief as to the truth of those allegations. 21.

Defendant admits that this is a derivative action and class action brought on

behalf of the minority stockholders of a public company formerly known as SCI that, before October 20, 2006, was headquartered in Greenville, South Carolina.

Except as expressly

admitted, Defendant denies any remaining allegations in Paragraph 1. 22.

Defendant admits that FITG and SCI were combined on October 20, 2006 and

that the combined company and FITG were located in Greensboro, North Carolina at that time. Defendant further admits that SCI was not worth $164 million and could not issue consideration in that amount. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 2. 23.

Defendant admits that FITG merged with a subsidiary of SCI and that SCI was

renamed International Textile Group, Inc. ("NITG"). Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 3. 24.

Defendant admits that the asked for price of SCI's stock on August 29, 2006

ranged between $14.00 and $14.65 per share on the Over the Counter Bulletin Board ("OTCBB"), and that SCI's stock was thinly traded and that OTCBB bid prices do not represent SCI's actual value. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 4. 25.

Defendant denies the allegations in Paragraph 5.

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26.

Defendant states that under SCRCP, Rule 8 he is not required to investigate third

party historical stock charts for more than a dozen independent companies to ascertain the underlying accuracy of Plaintiffs' proposed trial demonstrative, and, on that basis, he is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 6, the footnote to Paragraph 6, and the chart following Paragraph 6. 27.

Defendant admits that on April 2, 2008, the asked for price of NITG' s stock was

$1.65 a share on the OTCBB, that NITG's stock was thinly traded and that OTCBB bid prices do not represent NITG's actual value.

Except as expressly admitted, Defendant denies any

remaining allegations in Paragraph 7. 28.

Defendant admits that the asked for price of NTIG's stock has been less than ten

cents a share on the OTCBB, that NITG's stock is thinly traded, and that OTCBB bid prices do not represent NITG's actual value.

Except as expressly admitted, Defendant denies any

remaining allegations in Paragraph 8. 29.

Defendant admits that Plaintiffs purport to paraphrase and quote from NITG's

Form lO-Q filed on November 12, 2010, this document speaks for itself, and Defendant denies any allegations inconsistent with the content of that document. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 9. 30.

Defendant denies the allegations in Paragraph 10.

31.

Defendant denies the allegations in Paragraph 11.

32.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 12. 33.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 13.

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34.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 14. 35.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 15. 36.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 16. 37.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 17. 38.

Defendant states that this is a legal conclusion that is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 18. 39.

Defendant denies the allegations in Paragraph 19.

40.

Defendant denies the allegations in Paragraph 20.

41.

Defendant admits that Plaintiffs were shareholders of SCI before the merger and

that Menezes and FURSA are shareholders of NITG.

Defendant is without knowledge or

information to form a belief as to the truth of whether the other Plaintiffs are shareholders of NITG. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 21. 42.

Defendant admits that Wilbur Ross and W.L. Ross & Co., LLC ("WLR") are

defendants in this matter. Defendant further admits that affiliates of WLR held the majority of shares of SCI and FITG, and the majority of shares of NITG. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 22. 43.

Defendant admits that Michael Gibbons and David Storper were directors of SCI

at the time of the merger with FITG. Defendant further admits that David Wax and Messrs.

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Gibbons and Storper are employed by WLR and are defendants in this matter, and that affiliates of WLR owned shares in SCI and FITG. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 23. 44.

Defendant admits that he was the independent director of SCI and is a defendant

in this matter. Defendant further admits that RSM was the financial advisor for the SCI special committee for the merger and is a defendant in this matter. Defendant further admits that Joe Gorga was a director and the CEO of FITG, a director of SCI as of April 2006, and is a defendant in this matter. Defendant further admits that Gary Smith was a director and the CFO of FITG and is a defendant in this matter. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 24. 45.

Defendant admits that NITG has been named as a nominal defendant in the

derivative action. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 25. 46.

Defendant states that this is a legal conclusion tha'" is not subject to an admission

or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 26. 47.

Defendant admits the allegations in Paragraph 27.

48.

Defendant denies the allegations in Paragraph 28.

49.

Defendant admits that Menezes is an adult individual resident of South Carolina.

Defendant further admits that shortly before the merger, Menezes exercised options and purchased 102,000 shares of SCI stock, subsequently acquired approximately 11,000 additional shares ofNITG, and still owned stock in NITG as of September 10,2010. Except as expressly admitted, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 29.

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50.

Defendant admits that FURSA owned 358,606 shares in SCI before the merger

with FITG, purchased approximately 72,000 additional shares in anticipation of the merger and thereafter, and still held stock in NITG as of 2010. Except as expressly admitted, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 30. 51.

Defendant admits that at the time of the merger, Ramius Capital Group, LLC;

RCG Carpathia Master Fund ("Carpathia"); Ramius Securities, LLC; C4S & Co., LLC; Peter A. Cohen, Morgan B. Stark, Thomas W. Strauss, and Jeffrey M. Solomon were beneficial owners of 350,671 shares of SCI held by Carpathia and Ramius Securities, LLC. Except as expressly admitted, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 31. 52.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 32. 53.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 33. 54.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 34. 55.

Defendant admits that NITG is a publicly traded Delaware company. Defendant

further admits that FITG became a subsidiary of SCI and SCI was renamed NITG. Defendant further admits that before the merger SCI had its headquarters and principal place of business in South Carolina. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 35.

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56.

Defendant admits that on the day of the merger, NITG consolidated its

headquarters in Greensboro, North Carolina. Defendant further admits that a subsidiary ofNITG has operations located in Greenville, South Carolina. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 36. 57.

Defendant admits that he became a director of SCI in July 2005, Messrs. Ross,

Storper, and Gibbons were SCI directors beginning in December 2005, and Mr. Gorga was a SCI director beginning in April 2006. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 37. 58.

Defendant admits that Plaintiffs purport to paraphrase and quote from the Joint

Proxy Statement/Prospectus of SCI and FITG, dated September 22,2006 ("Prospectus"), that the Prospectus speaks for itself, and Defendant denies any allegations inconsistent with the content of the Prospectus. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 38. 59.

Defendant admits that FITG merged with a subsidiary of SCI and that SCI was

renamed International Textile Group, Inc.. Defendant further admits that FITG was a private company located in Greensboro, North Carolina.

Except as expressly admitted, Defendant

denies any remaining allegations in Paragraph 39. 60.

Defendant admits that Plaintiffs purport to paraphrase and quote from the

Prospectus, that the Prospectus speaks for itself, and Defendant denies any allegations inconsistent with the content of the Prospectus.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 40. 61.

Defendant admits the allegations in Paragraph 41.

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62.

On infonnation and belief as to these matters, Defendant admits that Wilbur L.

Ross, Jr. is a Florida resident and Chainnan and CEO of WLR which he created in 2000. Defendant further admits that Mr. Ross sold his 99% ownership interest in WLR to Invesco and that he has a financial stake in Funds II and III. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 42. 63.

Defendant admits the allegations in Paragraph 43.

64.

On infonnation and belief as to these matters, Defendant admits that Mr. Ross

serves or has served on the boards of Nano-Tex, LLC, International Coal Group, Inc., Clarent Hospital Corp., and Phoenix International Holding Co. of the United States; Mittal Steel Company, N.V. of the Netherlands; Insuratex, Ltd. of Bennuda; Nikko Electric Industry Co. Ltd. and Ohizumi Manufacturing Company of Japan; Blue Ocean Re Holdings Ltd. and Montpelier Re Holdings Ltd. in Bennuda; International Auto Components Group SL in Europe and Brazil; and Wagon PLC in Europe. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 44. 65.

On infonnation and belief as to these matters, Defendant admits that Mr. Ross

has appeared on Forbes magazine's various lists of wealthy individuals, that he has been labeled a "billionaire" in the media, and that such estimates of his wealth are inflated and not based on any earnings infonnation provided by him. Defendant further admits that some media outlets have referred to Mr. Ross by the nickname the "King of Bankruptcy," but that Mr. Ross is neither a monarch nor refers to himself by this name. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 45. 66.

On infonnation and belief as to these matters, Defendant admits that Mr. Ross has

appeared on Forbes magazine's various lists of wealthy individuals and that such estimates of his

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wealth are inflated and not based on any earnings information provided by him. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 46. 67.

Defendant admits that Fund III owned approximately 72% of SCI and Fund II

owned 74% of International Textile Holdings ("ITH"), which owned 85.4% of FITG. Since the merger, Fund II, through ITH, and Fund III own more than 85% of NITG. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 47. 68.

Defendant admits that affiliates of WLR held four of the five seats on the SCI

Board, five of the six seats on the FITG Board, and six of the eight seats on the NITG Board. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 48. 69.

On information and belief as to these matters, Defendant admits that in July 2006,

Invesco agreed to acquire WLR for an initial payment of $100 million with additional payments between $30 to $55 million, the payable amount depending on the achievement of annual fund raising targets over the five years after the transaction's completion. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 49. 70.

On information and belief as to these matters, Defendant admits that the

performance and value of portfolio companies in existing WLR affiliated funds-including FITG and SCI-played no role in the amount paid by Invesco for WLR because the deal was forward looking and Invesco did not purchase an interest in FITG's, SCI's, or any other portfolio company's performance.

Except as expressly admitted, Defendant denies any remaining

allegations in Paragraph 50. 71.

Defendant admits the allegations in Paragraph 51.

72.

Defendant denies the allegations in Paragraph 52.

73.

Defendant denies the allegations in Paragraph 53.

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74.

On information and belief as to these matters, Defendant admits that the

performance and value of portfolio companies in existing WLR affiliated funds-including FITG and SCI-played no role in the amount paid by Invesco for WLR because the deal was forward looking and Invesco did not purchase an interest in FITG's, SCI's, or any other portfolio company's performance.

Except as expressly admitted, Defendant denies any remaining

allegations in Paragraph 54. 75.

On information and belief as to these matters, Defendant admits that Mr. Ross is

Chairman and CEO of WLR and that WLR does not invest in any funds or portfolio companies. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 55. 76.

On information and belief as to these matters, Defendant admits that WLR

Recovery Fund IV, L.P. ("Fund IV") closed in September 2007. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 56. 77.

Defendant admits the allegations in Paragraph 57.

78.

On information and belief as to these matters, Defendant admits that Fund IV has

approximately $4 billion in committed capital. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 58. 79.

On information and belief as to these matters, Defendant admits that during Fund

IV's investment period, which generally runs four years or until a new fund is launched, it pays an annual management fee totaling 1.5% of the size of the Fund. Defendant further admits that since Invesco purchased WLR, Invesco has received all management fees paid by the funds managed by WLR. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 59.

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80.

On information and belief as to these matters, Defendant admits that WLR

Recovery Fund V, L.P. ("Fund V") was recently launched to make investments in distressed compames.

Except as expressly admitted, Defendant denies any remaining allegations in

Paragraph 60. 81.

On information and belief as to these matters, Defendant admits that WLR

Recovery Funds typically pay an annual management fee totaling 1.5% of the size of the Fund during their investment periods, which generally run four years or until a new fund is launched. Defendant further admits that Invesco will receive all management fees paid by Fund V when it begins paying management fees, but that the amount of the management fees to be paid by Fund V has not been determined yet. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 61. 82.

On information and belief as to these matters, Defendant admits that Mr. Ross has

received payments called for in the WLR purchase agreement. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 62. 83.

Defendant admits the FITG's business plan in 2006 was to build Greenfield plants

located in lower cost countries closer to its customers. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 63. 84.

Defendant denies the allegations in Paragraph 64.

85.

On information and belief as to these matters, Defendant admits that Mr. Ross

raised billions of dollars even though FITG, SCI, and NITG have struggled to perform. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 65. 86.

Defendant states that the allegations in Paragraph 66 and its subparts A-E-

"Ross's actions at issue in this case"-are so vague and unspecified that he is not subject to

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admission or denial. Indeed, Defendant does not know what alleged actions Plaintiffs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Ross undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or information to form a belief as to the truth of any allegations in Paragraph 66 and its subparts AE.

87.

On information and belief as to these matters, Defendant admits that WLR is an

investment firm based in New York that invests in financially distressed companies in various ways, including leveraged buyouts and restructurings. Defendant further admits that Mr. Ross founded WLR in April 2000. Defendant further admits that none of them are citizens of South Carolina.

Except as expressly admitted, Defendant denies any remaining allegations in

Paragraph 67 and footnote 2. 1 88.

Defendant admits that, at the time of the merger, Fund II owned 241,419 shares of

SCI and Fund III owned 3,920,975 shares of SCI, which constituted approximately 75.6% ownership.

Except as expressly admitted, Defendant denies any remaining allegations in

Paragraph 68. 89.

Defendant admits that four of the five SCI directors were interested in the merger

and that Messrs. Ross, Gibbons, Storper and Gorga sat on SCI's Board. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 69.

I As set forth in the General Denial, Defendant objects to Plaintiffs definition of WLR in the Amended Consolidated Complaint on the grounds that it is so broad that it makes an already prolix pleading even more burdensome, and renders many allegations vague and ambiguous. Accordingly, Defendant interprets every references to WLR in the Amended Consolidated Complaint as solely meaning the entity WL Ross & Co., LLC, and Defendant denies each and every allegation in the Amended Complaint in which Plaintiffs interpret WLR to include any Defendant other than the entity WL Ross & Co., LLC. Defendant further states that all references to WLR in this Answer strictly mean the entity WL Ross & Co., LLC and do not encompass any WLR affiliates, including but not limited to Associates II and III, Funds II and III, or Messrs. Ross, Storper, Gibbons, or Wax.

- 20ATI-2491514vl


90.

Defendant admits that, at the time of the merger, Fund II owned 74% of ITH,

which owned 14,310,497 shares of FITG, constituting approximately 85.4% ownership. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 70. 91.

Defendant admits that five of the six FITG directors were interested in the merger

and that Mr. Ross was Chairman and Messrs. Wax, Smith, Gorga and Ms. Wilson sat on FITG's Board. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 71.

92.

Defendant admits that Fund II, through ITH, and Fund III own approximately

22,902,280 shares of common and preferred NITG stock.

Except as expressly admitted,

Defendant denies any remaining allegations in Paragraph 72. 93.

Defendant admits that affiliates of WLR hold six of the eight seats on NITG's

Board of Directors and that Mr. Ross is Chairman and Messrs. Gibbons, Storper, Wax, Gorga and Ms. Wilson sit on NITG's Board. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 73. 94.

Defendant admits that Fund II owned 241,419 shares of SCI and that WLR is its

management company.

Except as expressly admitted, Defendant denies any remaining

allegations in Paragraph 74. 95.

Defendant admits that Fund II valued its stockholdings in SCI at approximately

$3 million and that value was calculated on Fund II's original cost to purchase those shares. Defendant further admits that the $3 million value of those shares remained the same after the merger and did not change until mid-2008. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 75.

- 21 ATI-2491514vI


96.

Defendant admits that, at the time of the merger, Fund II ovvned 74% of ITH,

which owned 14,310,497 shares ofFITG. Defendant further admits that Fund II valued its share of FITG at approximately $111.7 million and that value was calculated based on the last equity transaction for these shares-a sale to the Pension Benefit Guaranty Corporation in 2005. Defendant further admits that the $111.7 million value of FITG remained the same after the merger and did not change until mid-2008. Defendant further admits that Fund II's cost basis for FITG was approximately $53.1 million based on the purchase of Burlington Industries and Cone Mills in November 2003 and March 2004. Defendant further admits that as of September 30, 2006, Fund II had made four separate loans to FITG totaling approximately $56.2 million to fund FITG's building facilities located in low cost markets that were closer to its customers. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 76. 97.

On information and belief as to these matters, Defendant admits that Associates II

is the general partner of Fund II and that Associates II's investment advisor is WLR. Defendant further admits that Mr. Ross was and is general manager of Associates II, which had and has voting power over shares owned by Fund II. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 77. 98.

On information and belief as to these matters, Defendant admits that Associates

II's capital balance in Fund II for the nine months ended September 30,2006 was approximately 11.3% of the total partner capital for Fund II. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 78. 99.

On information and belief as to these matters, Defendant admits that WLR

employees were members of Associates II and that Mr. Ross had an approximately 54% interest, Mr. Storper had a 12.5% interest, Mr. Wax had a 7.5% interest, and Mr. Gibbons had a 2%

- 22ATl-2491514vl


interest in Associates II.

Except as expressly admitted, Defendant denies any remammg

allegations in Paragraph 79. 100.

On information and belief as to these matters, Defendant admits that Fund III

owned 3,920,975 shares of SCI and that WLR is its management company. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 80. 101.

On information and belief as to these matters, Defendant admits that Fund III

valued its holdings in SCI at approximately $48.7 million and that value was calculated on Fund Ill's original cost to purchase those shares. Defendant further admits that the $48.7 million value of those shares and the basis for that value remained the same after the merger until mid-2008. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 81. 102.

On information and belief as to these matters, Defendant admits the allegations in

Paragraph 82. 103.

On information and belief as to these matters, Defendant admits that Associates

III is the general partner of Fund III and that Associates Ill's investment advisor is WLR. Defendant further admits that Mr. Ross was and is general manager of Associates III which had and has voting power over shares owned by Fund III. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 83. 104.

On information and belief as to these matters, Defendant admits that Associates

Ill's capital balance in Fund III for the nine months ended September 30, 2006 was approximately 6.75% of the total partner capital for Fund III. Except as expressly admitted, Defendant denies any remaining allegations in the unnumbered paragraph following Paragraph 83.

- 23 ATI-2491514vl


105.

On information and belief as to these matters, Defendant admits that WLR

employees were members of Associates III and that Mr. Ross had an approximately 56% interest, Mr. Storper had a 12.5% interest, Mr. Wax had a 7.5% interest, and Mr. Gibbons had a 2% interest in Associates III. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 84. 106.

On information and belief as to these matters, Defendant admits that Michael J.

Gibbons has been the Chief Financial Officer of WLR since July 2002 and is a resident of New York. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 85. 107.

On information and belief as to these matters, Defendant admits that Mr. Gibbons

has a financial interest in the performance of WLR and certain of its affiliates.

Except as

expressly admitted, Defendant denies any remaining allegations in Paragraph 86. 108.

On information and belief as to these matters, Defendant admits allegations in

Paragraph 87. 109.

On information and belief as to these matters, Defendant admits the allegations in

Paragraph 88. 110.

Defendant states that the allegations in Paragraph 89 and its subparts A-D-

"Gibbons's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions PlaintifTs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Gibbons undertook these unknown alleged actions.

Accordingly, Defendant is without

knowledge or information to form a belief as to the truth of any allegations in Paragraph 89 and its subparts A-D.

- 24ATI-2491514vI


111.

On information and belief as to these matters, Defendant admits that David H.

Storper has been a Senior Managing Director of WLR since April 2000 and is a resident of New York. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 90. 112.

On information and belief as to these matters, Defendant admits that Mr. Storper

has a financial interest in the performance of WLR and certain of its affiliates.

Except as

expressly admitted, Defendant denies any remaining allegations in Paragraph 91. 113.

On information and belief as to these matters, Defendant admits the allegations in

Paragraph 92. 114.

On information and belief as to these matters, Defendant admits that Mr. Storper,

before joining WLR, had been a Managing Director in the Restructuring Group at Rothschild Inc. since 1996 and holds a B.S. from Columbia University's School of Engineering and Applied Science and an M.B.A. from Columbia University. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 93. 115.

Defendant states that the allegations

In

Paragraph 94 and its subparts A-D-

"Storper's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions PlaintifIs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Storper undertook these unknown alleged actions.

Accordingly, Defendant is without

knowledge or information to form a belief as to the truth of any allegations in Paragraph 94 and its subparts A-D.

- 25 ATI-2491514vl


116.

On information and belief as to these matters, Defendant admits that David L.

Wax has been Managing Director of WLR since 2000 and is a resident of Connecticut. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 95. 117.

On information and belief as to these matters, Defendant admits that Mr. Wax

has a financial interest in the performance of WLR and certain of its affiliates.

Except as

expressly admitted, Defendant denies any remaining allegations in Paragraph 96. 118.

On information and belief as to these matters, Defendant admits that Mr. Wax

was the portfolio manager for FITG and SCI beginning in approximately February 2006, and, as part of that role, was the contact or "point" person for inquiries concerning those portfolio companies. Defendant further admits that, as portfolio manager for FITG and SCI, Mr. Wax was responsible for monitoring the combination of those companies. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 97. 119.

On information and belief as to these matters, Defendant admits the allegations in

Paragraph 98. 120.

On information and belief as to these matters,

Defendant admits that Mr. Wax,

before joining WLR in 2000, was a Managing Director at Rothschild, Inc., an investment banking firm, where he was active in restructuring and workouts for over 10 years, and, before joining Rothschild, had been with Bankers Trust for 15 years. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 99. 121.

Defendant states that the allegations in Paragraph 100 and its subparts A-D-

"Wax's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions Plaintiffs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Wax

- 26ATI-2491514vI


undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or information to form a belief as to the truth of any allegations in Paragraph 100 and its subparts A-D. 122.

Defendant admits the allegations in Paragraph 101.

123.

Defendant admits the allegations in Paragraph 102.

124.

Defendant denies the allegations in Paragraph 103.

125.

Defendant admits the allegations in Paragraph 104.

126.

Defendant admits the allegations in Paragraph 105.

127.

Defendant denies the allegations in Paragraph 106.

128.

Defendant admits the allegations in Paragraph 107.

129.

Defendant admits the allegations in Paragraph 108.

130.

Defendant denies the allegations in Paragraph 109.

131.

Defendant admits the allegations in Paragraph 110.

132.

On information and belief as to these matters, Defendant admits that in 2010 Mr.

Gorga's compensation totaled $688,011, and that his base salary was $660,000 for the year. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 111. 133.

Defendant denies the allegations in Paragraph 112.

134.

Defendant states that the allegations in Paragraph 113 and its subparts A-E-

"Gorga's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions PlaintifIs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Gorga undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or

- 27ATl-2491514vl


infonnation to fonn a belief as to the truth of any allegations in Paragraph 113 and its subparts A-E. 135. Directors.

Defendant admits that he was the independent director on SCI's Board of Except as expressly admitted, Defendant denies any remaining allegations

III

Paragraph 114. 136.

Defendant admits the allegations in Paragraph 115.

137.

Defendant states that the allegations in Paragraph 116 and its subparts A-C-

"Tessoni's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions Plaintiffs intend to encompass with these allegations and cannot meaningfully state the capacity in which he undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or infonnation to fonn a belief as to the truth of any allegations in Paragraph 116 and its subparts A-C. Defendant admits that Mr. Duerk is a resident of Greenville County, South

138.

Carolina, was President of SCI before the Merger, and was President of the Automotive Safety Group of the combined company. Defendant further admits that Mr. Duerk executed the Merger agreement at the direction of SCI's Board of Directors and retired from SCI effective December 31, 2007.

Except as expressly admitted, Defendant denies any remaining allegations in

Paragraph 117. 139.

Defendant states that the allegations in Paragraph 118 and its subparts A-C-

"Duerk's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions Plaintiffs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Duerk

- 28 ATl-2491514vl


undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or information to form a belief as to the truth of any allegations in Paragraph 118 and its subparts A-C. 140.

Defendant admits the allegations in Paragraph 119.

141.

Defendant denies the allegations in Paragraph 120.

142.

Defendant admits the allegations in Paragraph 121.

143.

Defendant admits the allegations in Paragraph 122.

144.

Defendant admits the allegations in Paragraph 123.

145.

Defendant denies the allegations in Paragraph 124.

146.

Defendant denies the allegations in Paragraph 125.

147.

Defendant admits the allegations in Paragraph 124.

148.

Defendant states that the allegations in Paragraph 127 and its subparts A-D-

"Smith's actions at issue in this case"-are so vague and unspecified that he is not subject to admission or denial. Indeed, Defendant does not know what alleged actions PlaintifTs intend to encompass with these allegations and cannot meaningfully state the capacity in which Mr. Smith undertook these unknown alleged actions. Accordingly, Defendant is without knowledge or information to form a belief as to the truth of any allegations in Paragraph 127 and its subparts A-D. 149.

Defendant admits that RSM is an investment banking firm that provides financial

consulting services for, among other things, mergers and acquisitions, and has multiple offices, including offices in New York and California.

Except as expressly admitted, Defendant is

without knowledge or information to form a belief as to the truth of any remaining allegations in Paragraph 128.

- 29ATI-2491514vl


150.

Defendant admits that RSM was retained by SCI's Independent Special

Committee of the Board of Directors in July 2006 to ofTer an opinion as to the fairness, from a financial point of view, to the stockholders of SCI other than Fund II and Fund III of the exchange ratio in the proposed business combination of FITG and SCI's merger subsidiary. Except as expressly admitted, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 129. 151.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 130. 152.

Defendant states that the allegation "THE MERGER -

Overview and

Consideration" preceding Paragraph 131 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 153.

Defendant admits the allegations in Paragraph 131.

154.

Defendant admits that Plaintiff purports to quote from the Prospectus, that the

Prospectus speaks for itself: and Defendant denies any allegations inconsistent with the content of the Prospectus. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 132. 155.

Defendant admits that PlaintifT purports to quote from the Prospectus, that the

Prospectus speaks for itself, and Defendant denies any allegations inconsistent with the content of the Prospectus. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 133. 156.

Defendant denies the allegations in Paragraph 134.

157.

Defendant admits that Fund III owned approximately 72% of SCI and Fund II

owned 74% of ITH, which owned 85.4% of FITG. Defendant further admits that at the time of

- 30 ATI-2491514vl


the merger five of the six directors of FITG and four of the five directors of SCI were interested in the merger. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 135. 158.

Defendant admits that the nature of the merger was such that only a super

majority of SCI's minority shareholders or the Continuing Director, as that term was defined in SCI's Charter, could legally cause the merger to occur. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 136. 159.

Defendant admits the allegations in Paragraph 137.

160.

Defendant admits that the exchange ratio set the conversion ratio for FITG stock

into SCI stock. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 138. 161.

Defendant admits that the exchange ratio was set through independent

negotiations between FITG's and SCI's special committees and that the exchange ratio yielded a split where SCI shareholders owned 35% of the combined company and FITG shareholders owned the remaining amount of shares. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 139. 162.

Defendant admits that Plaintiffs purports to quote and paraphrase from the

Prospectus, that the Prospectus speaks for itself, and Defendant denies any allegations inconsistent with the content of the Prospectus.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 140. 163.

Defendant admits that on August 29, 2006, SCI's and FITG's Boards approved

the merger. Defendant further admits that the asked for price of SCI's stock on August 29, 2006 ranged between $14.00 and $14.65 per share on the Over the Counter Bulletin Board

- 31 ATI-2491514vl


("OTCBB"), and that SCI's stock was thinly traded and that OTCBB bid prices do not represent SCI's actual value. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 141. 164.

Defendant denies the allegations in Paragraph 142.

165.

Defendant admits that the merger was announced on August 30, 2006 and that on

September 22, 2006 the asked for price of SCI's stock was $14.30 a share on the OTCBB, and that, on October 20,2006, the asked for price of SCI's stock was $13.25 a share on the OTCBB. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 143. 166.

Defendant denies the allegations in Paragraph 144.

167.

Defendant admits that, at the time of the merger, affiliates of WLR owned

14,310,497 shares of FITG constituting approximately 85.4% ownership. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 145. 168.

On information and belief as to these matters, Defendant admits that Fund II

owned 74% ofITH, which owned 14,310,497 shares ofFITG constituting approximately 85.4% ownership. Defendant further admits that Absolute Recovery Hedge Fund, Ltd. owned 17% of ITH and Absolute Recovery Hedge Fund, L.P. owned 9% ofITH. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 146. 169.

On information and belief as to these matters, Defendant admits that ITH owned

14,310,497 shares of ITG and ITH received 9,709,273 shares of SCI stock pursuant to the exchange ratio. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 147. 170.

Defendant denies the allegations in Paragraph 148.

171.

Defendant admits the allegations in Paragraph 149.

- 32 ATI-2491514vl


172.

Defendant admits that, based on the exchange ratio, 213,750 shares of FITG stock

converts into 145,023 shares of SCI stock. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 150. 173.

Defendant denies the allegations in Paragraph 151.

174.

Defendant admits the allegations in Paragraph 152.

175.

Defendant admits that, based on the exchange ratio, 74,375 shares of FITG stock

converts into 50,461 shares ofNITG stock. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 153. 176.

Defendant denies the allegations in Paragraph 154.

177.

Defendant denies the allegations in Paragraph 155.

178.

Defendant denies the allegations in Paragraph 156.

179.

Defendant denies the allegations in Paragraph 157.

180.

Defendant denies the allegations in Paragraph 158.

181.

Defendant incorporates by this reference his responses to Paragraphs 195-197 as

though fully set forth herein. Defendant further states that the allegations in Paragraph 159 are so speculative and vague, particularly as to what "it" refers to, that Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 159. 182.

Defendant states that the allegation "The Real Reasons for the Merger" preceding

Paragraph 160 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 183.

Defendant admits that SCI's liquidity was insufficient to cover FITG's Greenfield

projects and that SCI's earnings and net income plummeted from 2004 through 2007. Except as

- 33 ATI-2491514vl


expressly admitted and stated, Defendant denies the allegation "FITG was Failing and Needed SCI's Liquidity" preceding Paragraph 160. 184.

Defendant admits that Plaintiffs purport to quote and paraphrase from Gary Smith

Deposition Exhibit 17 and a document produced by Bank of America pursuant to a subpoena, those documents speak for themselves, and Defendant denies any allegations inconsistent with his contents.

Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 160. 185.

Defendant admits that FITG's business and business plan changed dramatically

from 2004 to 2006, and that FITG expected and publically disclosed it could have losses in 2006 while implementing its new business plan. Defendant further admits that, far from failing, FITG was investing in its future by rationalizing domestic production plants and building new facilities in low cost countries closer to its customers. Defendant further admits that Plaintiffs purport to quote and paraphrase from Gary Smith Deposition Exhibit 17 and documents produced by Bank of America pursuant to a subpoena, those documents speak for themselves, and Defendant denies any allegations inconsistent with his contents.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 161. 186.

Defendant admits that Plaintiffs purport to quote and paraphrase from spreadsheet

contained in Gary Smith Deposition Exhibit 46. Defendant further admits that the spreadsheet contained in Gary Smith Deposition Exhibit 46 is a duplicate of the spreadsheet contained in Gary Smith Deposition Exhibit 39.

Defendant denies any allegations inconsistent with the

contents of these spreadsheets and Gary Smith's explanatory testimony about these spreadsheets. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 162.

- 34 ATI-2491514vl


187.

Defendant admits that Fund II issued promissory notes to FITG in May 2006 for

$15.71 million, in June 2006 for $20.5 million, in September 2006 for $20 million, and in December 2006 for $10 million to fund international Greenfield projects consistent with FITG's business plan that was publicly disclosed in the Prospectus.

Except as expressly admitted,

Defendant denies any remaining allegations in Paragraph 163. 188.

Defendant admits that Fund II issued promissory notes to FITG in May 2006 for

$15.71 million, in June 2006 for $20.5 million, in September 2006 for $20 million, and in December 2006 for $10 million to fund international Greenfield projects located in Nicaragua, China, and Viet Nam. Defendant admits FITG's business plan, like virtually every business plan, contained risk, and that those risks were publicly disclosed in the Prospectus. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 164. 189.

Defendant denies the allegations in Paragraph 165.

190.

Defendant denies SCI was generating cash as of September 30, 2006, having lost

nearly $2.5 million in cash and cash equivalents since January 2006. Defendant further admits that SCI's cash flows from operations had plummeted, going from $13.4 million in 2004, to $6.9 million for 2005, to a net loss for the first three quarters of 2006. Defendant further states that SCI's cash on hand and the balance on its credit facility are not examples of SCI generating cash. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 166. 191.

Defendant admits that SCI had excess borrowing capacity before the merger and

that Messrs. Ross and Wax did not wish to use this debt to buyout the minority shareholders of SCI. Defendant further admits that SCI's available debt was better used for acquisitions or other business purposes to build company value rather than buyout its minority shareholders, which provided no benefit to SCI. Defendant further admits that FITG and SCI and, later, BST, were

- 35 ATl-2491514vl


more valuable combined than separate, and that such a combination would increase shareholder value and enable the combined company to be traded on an efficient, liquid market. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 167. 192.

Defendant admits that, far from failing, FITG was investing in its future by going

through a significant reorganization in 2006 that included rationalizing domestic plants and building international Greenfield projects. Defendant further admits that this plan was designed to lower FITG's costs, move it closer to its existing customers, and to expand into new international markets.

Defendant further admits that this quasi-start-up period was publicly

disclosed before the merger as was that FITG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing. Except as expressly admitted and stated, Defendant denies the allegation "The FITG and WLR Defendants Were Acutely Aware That FITG Was Failing" preceding Paragraph 168. 193.

On information and belief as to these matters, Defendant admits that, generally,

and in varying levels of specificity and detail depending on the Defendant in question, the WLR and the FITG defendants were aware of FITG's financial performance during 2006, and that Fund II had loaned money to FITG for Greenfield projects.

Except as expressly admitted,

Defendant denies any remaining allegations in Paragraph 168. 194.

Defendant admits that Plaintiffs purport to quote and paraphrase from Storper

Deposition Exhibit 525.

Defendant further admits that Storper Deposition Exhibit 525 is a

duplicate of Wax Deposition Exhibit 438 and Ross Deposition Exhibit 755. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 169.

- 36 ATI-2491514vl


195.

Defendant admits that Plaintiffs purport to quote and paraphrase from Wax

Deposition Exhibit 461.

Defendant further admits that Wax Deposition Exhibit 461 is a

duplicate of Gorga Deposition Exhibit 216, Smith Deposition Exhibit 125, Storper Deposition Exhibit 532, and Ross Deposition Exhibit 737. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including the significant testimony that math calculation discussed in these exhibits was in error. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 170. 196.

Defendant admits that PlaintiÂąIs purport to quote and paraphrase from Wax

Deposition Exhibit 471.

Defendant further admits that Wax Deposition Exhibit 471 is a

duplicate of Gorga Deposition Exhibit 254, Gibbons Deposition Exhibit 572, and Ross Deposition Exhibit 778. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including Ross's comments in this exhibit that it would be a shame for people to misperceive FITG as a money losing business and that the Prospectus should explain FITG's business strategy. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 171. 197.

Defendant admits that Plaintiffs purport to quote and paraphrase from Wax

Deposition Exhibit 471.

Defendant further admits that Wax Deposition Exhibit 471 is a

duplicate of Gorga Deposition Exhibit 254, Gibbons Deposition Exhibit 572, and Ross Deposition Exhibit 778. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 172.

- 37 ATI-2491514vl


198.

Defendant admits that Plaintiffs purport to quote and paraphrase from Smith

Deposition Exhibit 58. Defendant further admits that Smith Deposition Exhibit 58 is a duplicate of Gorga Deposition Exhibit 266 and Spradling Deposition Exhibit 365. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including Mr. Gorga's testimony rejecting that FITG lost business. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 173. 199.

Defendant admits that Plaintiffs purport to quote and paraphrase from Gorga

Deposition Exhibit 232.

Defendant further admits that Gorga Deposition Exhibit 232 is a

duplicate of Gorga Deposition Exhibit 269 and Ross Deposition Exhibit 785. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits.

Defendant denies that Ross stated in his email that FITG

"consistently reduced their budget and ... failed to met the reduced budgets," as his email refers to two small acquisitions and not to FITG as a whole. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 174. 200.

Defendant admits that Plaintiffs purport to quote and paraphrase from Gorga

Deposition Exhibit 271.

Defendant further admits that Gorga Deposition Exhibit 271 is a

duplicate of Wax Deposition Exhibit 482, Smith Deposition Exhibit 155, Storper Deposition Exhibit 539, and Ross Deposition Exhibit 786. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including that the discouraging weekly report was based on an error, that numbers were affected by increases in inventory due to plant rationalization, and that FITG's 2006 budget was impacted

- 38 ATI-249 I514vl


by unexpected events. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 175. 201.

Defendant admits that Plaintiffs purport to quote and paraphrase from Gorga

Deposition Exhibit 271.

Defendant further admits that Gorga Deposition Exhibit 271 is a

duplicate of Wax Deposition Exhibit 482, Smith Deposition Exhibit 155, Storper Deposition Exhibit 539, and Ross Deposition Exhibit 786. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including that the discouraging weekly report was based on an error, that numbers were affected by increases in inventory due to plant rationalization, and that FITG's 2006 budget was impacted by unexpected events. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 176. 202.

Defendant denies the allegations in Paragraph 177.

203.

Defendant admits that Plaintiffs purport to quote and paraphrase from Smith

Deposition Exhibit 157.

Defendant further admits that Smith Deposition Exhibit 157 is a

duplicate of Spradling Deposition Exhibit 366. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including that the numbers discussed in this email solely pertain to the Carlisle Division, one of the smaller divisions at FITG, and that cost reductions were made at that division to address losses. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 178. 204.

Defendant admits that Plaintiffs purport to quote and paraphrase from Smith

Deposition Exhibit 157.

Defendant further admits that Smith Deposition Exhibit 157 is a

duplicate of Spradling Deposition Exhibit 366. Defendant denies any allegations inconsistent

- 39 ATI-2491514vl


with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including that the numbers discussed in this email solely pertain to the Carlisle Division and that cost reductions were made at that division to address losses. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 179. 205.

Defendant denies the allegations in Paragraph 180.

206.

Defendant admits that SCI was in a very troubled company before the merger,

lacking senior management and suffering market share loss, customer relationship problems, technical problems, and falling earnings. Defendant further admits that not merging SCI with FITG would have exposed SCI to extreme risk of further declines and even failure. Except as expressly admitted and stated, Defendant denies the allegation "The WLR and FITG Defendants Were Aware of and Disregarded the Risk to SCI" preceding Paragraph 181. 207.

Defendant admits that FITG and SCI were both distressed companIes

III

challenging industries and were high risk investments. Defendant further admits that the risks associated with these companies were disclosed in public filings, and the risks of investing in FITG, SCI, and NITG were apparent to the minority shareholders of these companies. Except as expressly admitted, Defendant denies any remaining allegations in Paragraph 181. 208.

Defendant admits that Plaintiffs purport to quote and paraphrase from Ross

Deposition Exhibit 783. Defendant further admits that Ross Deposition Exhibit 783 is largely a duplicate of Ross Deposition Exhibit 784. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 182.

- 40ATI-2491514vl


209.

Defendant admits that Plaintiffs purport to quote and paraphrase from Ross

Deposition Exhibit 784. Defendant further admits that Ross Deposition Exhibit 784 is largely a duplicate of Ross Deposition Exhibit 783. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 183. 210.

Defendant admits that Plaintiffs accurately quote Wilbur Ross's deposition

testimony responding to the following question:

"Did you have any -- did you have any

conversations or communications with Mr. Tessoni regarding your belief that ITG faced tremendous execution risk?" Defendant further admits that the risks associated with FITG were clear and disclosed before the merger.

Except as expressly admitted and stated, Defendant

denies any remaining allegations in Paragraph 184. 211.

Defendant denies the allegations in Paragraph 185.

212.

Defendant admits that Plaintiffs purport to quote and paraphrase from Wax

Deposition Exhibits 472 and 473. Defendant further admits that Wax Deposition Exhibits 472 and 473 are duplicates of Gorga Deposition Exhibit 258, Storper Deposition Exhibit 538, Gibbons Deposition Exhibit 574, Ross Deposition Exhibit 779, Smith Deposition Exhibit 40, and Spradling Deposition Exhibits 309-310. Defendant denies any allegations inconsistent with the contents of these deposition exhibits and the explanatory testimony about these exhibits, including that Wax Deposition Exhibit 473 was a draft bank model for securing credit facilities for SCI, FITG, and BST; that Wax Deposition Exhibit 473 is not the business plan for the combined company, and that Mr. Ross became satisfied that merging SCI and FITG was a good

- 41 ATI-2491514vl


plan before he voted to approve the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 186. 213.

Defendant denies the allegations in Paragraph 187. Defendant further states that

the allegations in Paragraph 187 grossly misstate Mr. Wax's testimony, which was as follows: Well, I would -- I don't remember what my response was to Wilbur. If I was simply reading this today, I would have said to him that this is kind of a rhetorical question because, of course, we did due diligence both on each component of ITG as we made commitments to fund that component, as well as on SCI, as well as on BST. My senior partner does have a habit of sometimes asking rhetorical questions. I view that this is one of those. (Wax Depo at 615:5-15.) Between the time that we bought SCI in ... August 2006, we'd done significant work both on ITO as a company and on SCI as a company. The decision to put the companies together was because of the significant deficit in the business ofSCr. And the fact of the matter is that we didn't view SCI to have sustainability as a standalone business. And, you know, the decision to acquire BST was, in fact .. , part and parcel of the fact that we didn't believe that a number of SCI standalone businesses were sustainable. So this was an effort to create greater value out of the parts, you know. If -- so asking what due diligence did I do '" over the prior six months, there had been ... significant analysis, you know, resulting in the business model that is Exhibit 473 that related to what are the components for SCI, what are the components for ITG. You know, from my standpoint, I do not agree with Mr. Ross' characterization about risking SCI by putting it with ITG. The fact of the matter is that I believed that SCI was not a long-term sustainable business because it was in so many little market niches. You know, it had a number of identifiable problems in terms of how some of those businesses were run. We learned, during the course of the first nine months, and certainly by the time that we were here in August, that SCI was underperforming its budget significantly. So, you know, I don't know what else to tell you other than to say that this was just not pulled out of thin air in terms of answering your question, what due diligence had I done. (Wax Depo at 616:17-618:8.) 214.

Defendant admits that Mr. Ross did not have concerns about the Merger and did

not mention them to Messrs. Storper or Gibbons because Mr. Wax provided satisfactory

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explanations and details to justifY the merger: "I asked him what due diligence had he -- you see the questions that I have asked. I have testified now quite a few times that he ultimately satisfied me. It was my satisfaction that was needed, not some third party's satisfaction. He satisfied me." (Ross Depo at 576:17-22.)

Defendant further admits that Messrs. Storper and Gibbons

personally analyzed FITG's execution risks as they both listened to the SCI special committee's report concerning the merger and relied on its recommendation to approve the merger. Defendant further admits that Mr. Gibbons was informed about the written materials concerning the merger as he listened to the SCI special committee's report concerning the merger and relied on its recommendation to approve the merger.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 188. 215.

On information and belief as to these matters, Defendant admits that Mr. Ross's

questions about the merger were answered, that he was satisfied by the due diligence performed before approving the merger, and that a written record of his conversation with Mr. Wax was unnecessary: Q: Do you have, or is there any written evidence of any communication from Mr. Wax or anyone else addressing that question raised by you? A: No. Nor did I care that it was in writing. What I cared was to be satisfied that it made sense, and he ultimately satisfied me both in the case of the SCI and in the case of the BST. (Ross Depo at 574:16-23) Defendant further admits that Plaintiffs accurately quote Mr. Ross's deposition testimony. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 189.

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216.

Defendant admits that SCI's Board approved the merger on August 29, 2006 in

reliance on the recommendation of the SCI Special Committee. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 190. Defendant states that the allegation "The WLR and FITG Defendants' Real

217.

Agenda" preceding Paragraph 191 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 218.

Defendant admits that, in general, domestic textile manufacturers were not cost

competitive with their internationally based counterparts, largely due to cheaper labor and shipping costs.

Defendant further admits that FITG planned Greenfield projects in China,

Vietnam, and Nicaragua to be closer to its customers and become more cost competitive in its Defendant further admits that FITG planned to rationalize domestic plants to save

market.

money and to transfer that production to newer, cheaper international plants. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 191. 219.

Defendant denies the allegations in Paragraph 192.

220.

Defendant denies the allegations in Paragraph 193.

221.

Defendant denies the allegations in Paragraph 194.

222.

Defendant admits that combining FITG, SCI, and BST into one company made

the combined company more diversified, larger, and more attractive to the public markets for an IPa. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 195. 223. one way

III

Defendant admits that, among other methods, selling shares on an open market is which shareholders realize value from their investments.

Except as expressly

admitted and stated, Defendant denies any remaining allegations in Paragraph 196.

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224.

On information and belief as to these matters, Defendant admits that a standalone

FITG had revenues greater than the other comparable apparel company IPOs, and could have achieved a necessary scale for a public offering. (Stroper Ex. 527 at 10; Gorga Ex. 208 at 10; Wax Ex. 418 at 10.) Defendant further admits that an IPO of the combined company would have benefited all shareholders, including the legacy minority shareholders of SCI. Defendant further admits that Plaintiffs paraphrase and quote from a Bank of America document, that document speaks for itself, and Defendant denies any allegations inconsistent with that document. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 197. 225.

Defendant admits that FITG was a private company before the merger, its

financial performance was only disclosed as part of the merger process, and any notion that the merger helped hide FITG's financial performance is incorrect. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 198. 226.

On information and belief as to these matters,

Defendant admits that WLR

specializes in distressed investments that are risky and may take time to realize value. Defendant further admits that Mr. Ross and WLR have raised billions of dollars for newly established Funds since NITG's common stock price began being offered at a low level on the OTCBB. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 199. 227.

On information and belief as to these matters, Defendant admits that Amvescap,

PLC's purchase ofWLR was agreed to long before the merger was disclosed and played no role in that transaction. Defendant further admits that the merger had no effect on the amount of money received by Amvescap, PLC or Mr. Ross as part of that transaction. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 200.

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228.

Defendant admits that SCI's Board of Directors approved the merger in reliance

on the recommendation of the SCI Special Committee because the merger made good business sense and addressed SCI's significant needs. Defendant further admits that, at the time of the merger, SCI was exposed to significant performance risks as a standalone entity, and that risk would only have grown from that point forward due to the later implosion of the automotive market that saw SCI's market cut in half

Defendant further admits that SCI's minority

shareholders did not have an interest in FITG and that FITG's minority shareholders did not have an interest in SCI, which is why both sets of minority shareholders were represented by independent special committees that negotiated the exchange ratio and recommend that the merger be approved. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 201. 229.

Defendant admits that FITG never received a "going concern" opinion and was

never advised it was in danger of insolvency.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 202. 230.

Defendant states that the allegations "THE MERGER - Background Facts" and

"The First Standstill Waiver by Tessoni" preceding Paragraph 203 are so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 231.

Defendant admits that FITG was formed in 2004 when certain assets of

Burlington Industries and Cone Mills were combined. Defendant further admits that WLR is a management company and owns no shares in FITG, SCI, or NITG. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 203. 232.

Defendant admits that Fund III purchased its controlling interest

III

SCI in

December 2005 from the Zapata Corporation ("Zapata"). Defendant further admits that, in the

- 46ATI-2491514vI


Menezes deposition testimony cited in Paragraph 204, Menezes admits that he is speculating about Zapata's motivations for selling to WLR. Defendant further states that Zapata sold its controlling interest in SCI because it was unable to sell the entire company because there were no interested sellers and Zapata wanted to capitalize its investment in SCI before the company lost even more value or went bankrupt as a standalone.

(See Freeman Ex. 29 (Zapata

Corporation Schedule 14C at 6-9 [explaining reasons for saleD. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 204. 233.

Defendant admits that Fund III made the far superior offer for the controlling

interest of SCI, offering more than $1.00 per share than D.E. Shaw and made many fewer demands and revisions to the purchase agreement than D.E. Shaw. (See Freeman Ex. 29 (Zapata Corporation Schedule 14C at 6-9).

Defendant further states that there were no bidders for

Zapata's SCI shares other than Fund III, Fund II, and D.E. Shaw. (Id) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 205. 234.

Defendant admits that WLR entered into a confidentiality agreement with SCI

before Fund III purchased its controlling interest in SCI. Defendant further admits that the confidentiality agreement contained a "standstill provision" that, among other things, precluded WLR or any of its affiliates from purchasing stock in SCI without its consent.

Except as

expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 206. 235.

Defendant admits that he, the lone independent director on SCI's Board and the

lone Continuing Director as defined by SCI's articles of incorporation, was named to a single person special committee by the Zapata controlled SCI Board to consider the request to waive the standstill provision (i.e., provide the required company consent) so that Fund III could

- 47ATI-2491514vI


purchase its controlling interest in SCI. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 207. 236.

Defendant admits the allegations in Paragraph 208.

237.

Defendant admits that Zapata sold 3,920,975 shares of SCI to Fund III and

241,419 shares of SCI to Fund II. Defendant further admits that Fund II and Fund III purchased these shares for $12.30 per share.

Defendant further admits that on the day of the sale,

December 2, 2005, SCI's asked for price on the OTCBB was $15.00 per share.

Except as

expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 209. 238.

Defendant denies the allegations in Paragraph 210.

239.

Defendant admits that he was independent and adversarial while serving on the

SCI special committee, and was not improperly influenced by any of the interested directors, officers, or managers of FITG or SCI. Defendant further admits that he testified that he was not pressured whatsoever by an interested director, officer, or manager of FITG or SCI. (Tessoni Depo at 815.) Except as expressly admitted and stated, Defendant denies the allegation "The Second Standstill Waiver

The Co-Opting of Tessoni" preceding Paragraph 211.

240.

Defendant denies the allegations in Paragraph 211.

241.

Defendant admits that, on December 2,2005, WLR requested an unlimited waiver

of the standstill provision in the confidentiality agreement. Defendant further admits that, on that same date, the SCI Board created a special committee consisting of himself, the lone independent director on SCI's Board and the lone Continuing Director as defined by SCI's articles of incorporation, to consider that request.

Except as expressly admitted and stated, Defendant

denies any remaining allegations in Paragraph 212. 242.

Defendant denies the allegations in Paragraph 213.

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243.

Defendant admits that, in January and February 2006, management of FITG and

SCI continued meetings that had begun in the Fall of 2005 to discuss potential synergies between the two companies. Defendant further admits that, in February 2006, management of FITG and SCI discussed combining the two textile companies to capitalize on synergies and other cost savings. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 214. 244.

Defendant admits that SCI corporate counsel advised Menezes, SCI's CFO and

interim CEO, to have the SCI Board of Directors appoint an independent special committee to oversee any transaction between SCI and a WLR affiliate. Defendant further admits that all interested parties were made aware of this fact, including Messrs. Gorga, Gibbons, and Ross. Defendant further admits that Mr. Ross promptly agreed with SCI's corporate counsel and directed that the process be overseen by the independent special committee created by SCI's Board on December 2, 2005. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 215. 245.

Defendant admits that the email partially quoted in Paragraph 216 reads as

follows: I believe we need to reach out and co-opt Tessoni as we discussed. Mike, have you and WLR spoken to him? Separately, as Joe and I have discussed, our position is that we will address compensation issues as part of the integration, or if the decision is made to keep the companies separate, at that time. At the appropriate time, someone needs to have a heart to heart with Tamme. (Wax Ex. 410; emphasis added). Defendant further admits that Mr. Gibbons responded to this email as follows: I spoke to Dan Tessoni on Monday and he indicated that he appreciated the conversation, was expecting something of this nature since we became involved, and did not see a need to become involved in the details until something more solid was proposed that would affect the minority shareholders. He had

- 49ATI-2491514vl


no issues. The conversation with him did not indicate to me that he would have wanted to be kept in this inner loop of the discussions. (Wax Ex. 410; emphasis added). Defendant further admits that Mr. Wax testified that this email chain does not appear to be talking about the standstill waiver issue. (Wax Dep. at 214:4-11). Defendant further admits that Mr. Gibbons testified that he recalled no discussions of "co-opting" Tessoni, and that this email chain referred to compensation issues. (Gibbons Dep. at 298: 11-22.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 216. 246.

Defendant admits that he testified about Tessoni Ex. 35, which is partially quoted

in Paragraph 217, as follows: Q [Reading from Tessoni Ex. 35] "I know you mentioned in your voicemail message the other day that things were 'getting ugly.' I assume you have more detailed information than I do at this point." What was that all about? A Well, to the best of my recollection, it was about the fact that communications were very, very difficult. And my ability to respond on a timely basis to everybody's inquiries was inconsistent. So to me, that would have caused me to say, you know, I'm traveling here, I can't get emails very consistently. The telephones, my work schedule, and everybody else's availability is making things difficult. So I would -- if I recall - I just know it was a frustrating scenario at that time. So I may have described it as "getting ugly." It was difficult.

Q Well, did you -- in terms of getting ugly, did you -- did you feel that you were under pressure from Ross? A Absolutely not. (Tessoni Dep at 815:7-25; emphasis added) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 217. 247.

Defendant admits that the "principal purpose of Dave [Philip's] phone call was to

ask whether Dan had formally acted on the request to waive the standstill provision of the Confidentiality Agreement." (Tessoni Ex. 35.) Defendant further admits that the SCI Special

- 50ATI-2491514vl


Committee did not conditionally waive the standstill provision until more than two weeks after Mr. Phillips made the phone call referred to in Tessoni Ex. 35. Defendant further admits that Tessoni Ex. 35, partially quoted in Paragraph 218, speaks for itself and Defendant denies any allegations inconsistent with the content of that document. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 218. 248.

Defendant admits that he testified about Tessoni Ex. 38, which is partially quoted

in Paragraph 219, as follows:

Q That I -- if I can recall it, Counsel, and I can't tell you exactly, but I was concerned about the fact that I wasn't available to address the issues in a more timely manner, and it would be reasonable for me, given what I see here, to think that they were like, "Can we -can we get this matter addressed." And when it says "double teamed," all it means to me is there was more than one person on the call. (Tessoni Dep. at 824: 18-25; emphasis added.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 219. 249.

Defendant admits the allegations in Paragraph 220.

250.

Defendant admits that he, in his role as the member of the SCI Special

Committee, required FITG to sign a confidentiality agreement before reviewing any non-public SCI information. Defendant further admits that the SCI Special Committee, as consideration for conditionally waiving the standstill provision, imposed a 30-day time limit in which FITG was to investigate a possible transaction with SCI and, if a transaction was to be pursued, required that the SCI Board of Directors create a new special committee to review, evaluate, investigate, negotiate, and approve that transaction. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 221. 251.

Defendant admits that the SCI Special Committee, as consideration for

conditionally waiving the standstill provision, imposed a 30-day time limit in which FITG was to

- 51 ATI-2491514vl


investigate a possible transaction with SCI and, if a transaction was to be pursued, required that the SCI Board of Directors create a new special committee to review, evaluate, investigate, negotiate, and approve that transaction. Except as expressly admitted and stated, Defendant denies the allegation "The Problematic Basis for the Second Standstill Waiver" preceding Paragraph 222. 252.

Defendant admits that the SCI Special Committee, as consideration for

conditionally waiving the standstill provision, imposed a 30-day time limit in which FITG was to investigate a possible transaction with SCI and, if a transaction was to be pursued, required that the SCI Board of Directors create a new special committee to review, evaluate, investigate, negotiate, and approve that transaction. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 222. 253.

Defendant admits that he served on a single person special committee for SCI

before the independent special committee created by SCI's Board on December 2, 2005. Defendant further states that before Fund III purchased a controlling interest in SCI, he served on a single person special committee after having been appointed by Zapata affiliated directors. Defendant further admits that Mr. Menezes found my work on that prior special committee acceptable when Mr. Menezes received $620,000 in bonuses as a result of that special committee's work.

Defendant further incorporates his responses to Paragraphs 273-276 as

though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 223. 254.

Defendant admits that Plaintiffs attempt to quote and paraphrase from certain

resolutions of the SCI Special Committee, that the term "Potential Transaction" is defined in those resolutions and those resolutions speak for themselves, and Defendant denies any

- 52 ATI-2491514vl


allegations inconsistent with those resolutions. Defendant further admits that SCI had gone through a prolonged two year sale process in which it could not sell the entire company, but could only peddle the majority interest to distressed investors. Defendant further admits that SCI's prior Board, when selling control to Fund III, stated that SCI would benefit from vertical integration and WLR's experience with building businesses, and the Potential Transaction was designed toward that end.

Except as expressly admitted and stated, Defendant denies any

remaining allegations in Paragraph 224. 255. forth herein.

Defendant incorporates his responses to Paragraphs 298-302 as though fully set Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 225. 256.

Defendant admits that Plaintiffs attempt to paraphrase and quote Tessoni

Deposition Ex. 49, which are resolutions from a September 23, 2005 meeting of the a SCI special committee in which he reported on his meeting with Mr. Ross that led to his approving the sale of the Zapata majority of SCI.

Defendant further states that Mr. Ross's earlier

statements were consistent with waiving the standstill provision, as no vertical integration or restructuring could take place without the standstill provision first being waived. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 226. 257.

Defendant states that the allegation "FITG Conducts Diligence on SCI and

Recommends Buying SCI" preceding Paragraph 227 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 258.

Defendant admits that the FITG executed the confidentiality agreement on March

15, 2006, the day before the standstill provision was waived, on March 16, 2006. Compare Smith Dep. Ex. 168 and Tessoni Dep. Ex. 40 [March 15,2006 Confidentiality Agreement] with

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Tessoni Dep. Ex. 41 [Resolutions waiving standstill provision]. Defendant further admits that a prerequisite demanded by the SCI special committee for waiving the standstill provision was

that FITG execute and agree to be bound by the confidentiality agreement from September 2005. Defendant further admits that as part of the thirty day review period imposed by the SCI special committee, FITG performed a pre-transaction investigation of SCI to further explore a potential transaction between FITG and SCI. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 227. 259.

Defendant admits that in 2005 and early 2006 FITG and SCI had undertaken a

bilateral review to identifY synergies among the companies and so that FITG management, which had greater technical knowhow, could assist SCI with production and other manufacturing problems. Defendant further states that Mr. Menezes did not stop "diligence" on SCI because no transaction had been defined or discussed, and merger related diligence could not begin until April 13, 2006 when SCI established a special committee to review, evaluate, investigate, negotiate, and approve that potential transaction. Defendant further admits that diligence was performed by the special committees' advisors for both companies beginning on April 13, 2006 through the end of August 2006. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 228. 260.

Defendant admits that FITG personnel, pursuant to the demand made by the SCI

special committee and approved by SCI's corporate counsel, conducted a pre-transaction investigation of SCI that included meeting with SCI management on March 24 and 25, 2006. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 229.

- 54ATI-249 I514vl


261.

Defendant admits the Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 414 and Smith Dep. Ex. 178, those documents speak for themselves, and Defendant denies any allegations inconsistent with those documents. Defendant further admits that the results of the pre-transaction investigation of SCI led FITG management to recommend that FITG and SCI move forward with a possible merger.

Except as expressly admitted and stated, Defendant

denies any remaining allegations in Paragraph 230. 262.

Defendant admits that FITG's Board agreed with management's pre-transaction

recommendation that FITG and SCI move forward with a possible merger and that FITG took additional steps to combine with SCI. Defendant further admits that as of April 6, 2006, neither SCI nor FITG had conducted sut1icient merger diligence, agreed to a merger structure, agreed to (or even drafted) a merger agreement, or determined the consideration for the merger. As Mr. Ross testified: Q. Do you recall that being the case, that you all, to use Mr. Wax's terminology, definitively decided to combine SCI and ITG at that board meeting?

A No, I don't think so. We decided to go ahead with the process. That's all. Q You think Mr. Wax was overstating the case? A I do.

Q To say definitively deciding? A Sure. We didn't have a merger document. We didn't have anything. (Ross Depo. at 392-93.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 231. 263.

On information and belief as to these matters, Defendant admits that Mr. Wax

was the "point person" at WLR concerning the merger and was the WLR employee responsible

- 55 ATI-2491514vl


for overseeing the merger and providing information about the merger to other WLR personnel. Defendant admits the Plaintiffs purport to paraphrase and quote from Wax Dep. Ex. 414, that document speaks for itself, and denies any allegations inconsistent with its contents. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 232. 264.

Defendant admits that SCI conducted detailed due diligence on FITG as part of

the merger. Except as expressly admitted and stated, Defendant denies the allegation "SCI Not Authorized to Conduct Diligence on FITG" preceding Paragraph 233. 265.

Defendant admits that SCI was authorized to and, in fact, did perform due

diligence on FITG. Defendant further states that FITG, as a privately held company with a common owner of SCI, did not have the same confidentiality concerns as SCI, a publicly held company, that necessitated a confidentiality agreement be signed during the pre-transaction investigative period. Defendant further admits that the advisors to the SCI special committee signed confidentiality agreements when accessing FITG's information from the "due diligence room" that was set up after April 13, 2006 when the merger diligence began.

Except as

expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 233. 266.

Defendant admits that Plaintiffs purport to paraphrase and quote Mr. Duerk's

deposition testimony, that testimony speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that the SCI Board exclusively delegated responsibility for reviewing, evaluating, investigating, negotiating, and approving any transaction with FITG to the SCI special committee and its advisors. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 234. 267.

Defendant admits that Plaintiffs purport to paraphrase and quote my deposition

testimony, that testimony speaks for itself, and denies any allegations inconsistent with it.

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Defendant further admits that I, on behalf of the SCI special committee, engaged advisors to perform due diligence and consult with me concerning the merger transaction. Defendant further admits that the advisors to the SCI special committee presented their diligence findings to me, answered my many questions, and discussed diligence items raised by the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 235. 268.

Defendant admits that Plaintiffs purport to paraphrase and quote Mr. Choy's

deposition testimony, that testimony speaks for itself, and denies any allegations inconsistent with it. Defendant further states that RSM performed due diligence on FITG, created models testing FITG's business plan and projections, and conducted valuations of FITG. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 236. 269.

Defendant admits that Plaintiffs purport to paraphrase and quote Mr. Choy's

deposition testimony, that testimony speaks for itself, and denies any allegations inconsistent with it. Defendant further states that RSM performed due diligence on FITG, created models testing FITG's business plan and projections, and conducted valuations of FITG. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 237. 270.

Defendant admits that SCI and FITG management were "interested" in the

context of the merger and could not conduct independent diligence like the advisors to the respective special committees to whom the task of diligence was assigned. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 238. 271.

Defendant admits that SCI and FITG were both textile weaving companies and

had significant overlap and synergies. Defendant further admits that many members of SCI management, including Stephen Duerk, Bill Nelli, Vick Crowley, Bart Hanaway, and Uwe

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Zimmerman, were in favor of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 239. 272.

Defendant admits that FITG management had to make a presentation to its Board

about going forward with a potential transaction with SCI because the SCI special committee set forth a review time period and demanded that FITG make a decision about a transaction with SCI within thirty days. Defendant further admits that FITG made no such demands on SCI and that a premerger investigation about a potential transaction was not necessary as SCI and FITG would conduct further diligence on the companies as part of the merger process. Defendant further states that Mr. Menezes was SCI's interim CEO in April 2006 and could have either demanded an opportunity to conduct a similar pre-transaction investigation of FITG or ask the SCI special committee to demand one. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 240. 273.

Defendant admits that SCI's minority shareholders could have sold their stock in

SCI or NITG at any time before or after the merger. Defendant further admits that taking SCI private was not worth the cost of buying out the minority shareholders and that capital outlays would be better spent on improving the company. Except as expressly admitted and stated, Defendant denies the allegation "Ross Directs That SCI Acquire FITG (Instead of FITG Acquiring SCI) To Avoid Spending Cash to Buy Out Minority Shareholders" preceding Paragraph 241. 274.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 414, that document speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that Wax Dep. Ex. 414 is management's recommendation concerning the merger without regard to merger structure or any legal or tax implications arising from

- 58 ATl-2491514vl


merger structure. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 241. 275.

Defendant admits that Plaintiffs purport to paraphrase and quote from Mr. Wax's

deposition, that testimony speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that Mr. Wax's testimony cited to in Paragraph 242 is Mr. Wax agreeing to a math formula presented by Plaintiffs' counsel multiplying market cap by the number of minority shares: Q. Well, if the stock was trading at about 14, $14.50 at the time and they [SCI minority shareholders] were 25 percent, I think the company's market cap was roughly $80 million. Does that sound about right? A. No. Well, I can't -- you know, in the back of my mind, I thought the market cap was more like $50 million or -- no, no. We paid $55 million for it so it was probably $80 million, so yeah, it was probably $25 million plus.

Q. To buyout the minority shareholders? A. At the current market price. Q. At the then current market price? A. At the then current market price. (Wax Dep. at 255-56.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 242 276.

Defendant admits that, as set forth in Paragraph 275 of this Answer, Mr. Wax was

generally agreeing to a math formula presented by Plaintiffs' counsel where he multiplies market cap by the number of minority shares and was not providing an opinion on the value of SCI at the time of the merger based on his "insider information about SCI" or his expertise as a "sophisticated buy-out professional." Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 243.

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277.

Defendant admits that no cash was paid out as part of the merger and that it was a

stock for stock transaction. Defendant further admits that a subsidiary of SCI acquired FITG and SCI was the surviving company after the transaction, which allowed SCI's minority shareholders to sell their shares either before or after the closing of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 244. 278.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 416, that document speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that Messrs. Ross and Wax did not want to use expensive capital to buy out minority shareholders because it was not important for SCI to be a private company, Mr. Ross had told me before SCI was purchased that he intended to keep SCI a publicly traded company, and that capital could be better used to fund acquisitions or otherwise benefit the company's growth. (Wax Dep. at 259-61; Ross Dep. at 395-98; Tessoni Ex. 49.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 245. 279.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga Dep.

Ex. 205, that document speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that Messrs. Ross and Wax did not want to use expensive capital to buy out minority shareholders because it was not important for SCI to be a private company, Mr. Ross had told me before SCI was purchased that he intended to keep SCI a publicly traded company, and that capital could be better used to fund acquisitions or otherwise benefit the company's growth. (Wax Dep. at 259-61; Ross Dep. at 395-98; Tessoni Ex. 49.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 246.

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280.

Defendant states that the allegation "The WLR Proposal for Merging FITG into

preceding Paragraph 247 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 281.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 440 and Gorga Dep. Ex. 205, that those documents speak for themselves, and denies any allegations inconsistent with them. Defendant admits that on May 30, 2006, WLR submitted a proposal concerning the structure of the merger to FITG's and SCI's special committees. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 247. 282.

Defendant admits that the May 30, 2006 proposal from WLR to the FITG and SCI

special committees also included a proposed exchange ratio formula to serve as a reference point for the special committees and that proposed exchange ratio formula was not used to calculate the agreed upon exchange ratio for the merger.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 248. 283.

Defendant admits that FITG had significant assets that were not reflected on its

books because accounting rules required that certain assets be carried on FITG's books at zero value due to FITG's constituent companies-Burlington Industries and Cone Mills-being purchased out of bankruptcy. Defendant further admits that the May 30, 2006 proposal from WLR to the FITG and SCI special committees also included a proposed exchange ratio formula to serve as a reference point for the special committees and that proposed exchange ratio formula was not used to calculate the agreed upon exchange ratio for the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 249. 284.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 440, that document speaks for itself, and denies any allegations inconsistent with it.

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Defendant further admits that the May 30, 2006 proposal from WLR to the FITG and SCI special committees also included a proposed exchange ratio formula to serve as a reference point for the special committees and that proposed exchange ratio formula was not used to calculate the agreed upon exchange ratio for the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 250. 285.

Defendant admits that the proposed exchange ratio formula, at the time the

Prospectus was filed on September 1, 2006, would have yielded an exchange ratio of FITG shareholders owning 61.8% and SCI shareholders owning 38.2% of the combined company because FITG's balance sheet changed between March and September 2006. Defendant further admits that as of May 30, 2006, the proposed exchange ratio formula would have yielded an exchange ratio of FITG shareholders owning approximately 63% and SCI shareholders owning approximately 37% of the combined company.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 251. 286.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Dep.

Ex. 440, that document speaks for itself, and denies any allegations inconsistent with it. Defendant further admits that the May 30, 2006 proposal from WLR to the FITG and SCI special committees also included a proposed exchange ratio formula to serve as a reference point for the special committees and that proposed exchange ratio formula was not used to calculate the agreed upon exchange ratio for the merger. Defendant further admits that the May 30, 2006 proposal stated that FITG shareholders "would own approximately 65% of the post-Merger entity," was included for example purposes only, and was not controlling on the special committees.

Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 252.

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287.

Defendant admits that the SCI special committee and its advisors conducted

detailed due diligence of FITG on behalf of SCI's minority shareholders. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 253. 288.

Defendant admits that before the merger Fund III held the majority of shares of

SCI and after the merger ITH held the majority of shares ofNITG. Defendant further admits that the SCI special committee and its advisors conducted detailed due diligence on FITG on behalf of SCI's minority shareholders. Defendant further admits that the May 30, 2006 proposal from WLR to the FITG and SCI special committees also included a proposed exchange ratio formula to serve as a reference point for the special committees and that proposed exchange ratio formula was not used to calculate the agreed upon exchange ratio for the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 254. 289.

Defendant admits that a dividend of 1/9 of all SCI shares was issued before the

merger and that those shares were escrowed for indemnification purposes and increased the number of SCI shares issued to SCI's legacy shareholders in NITG. Defendant further admits that these additional escrowed shares were distributed and Plaintiffs waited for this distribution before filing this lawsuit. Defendant further admits that SCI was the surviving company after the merger and that SCI shareholders who did not agree with the merger or that combining FITG and SCI was a good investment could have sold their shares at any time and received consideration for their shares.

Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 255. 290.

Defendant admits that SCI shareholders did not have appraisal rights because they

were the surviving shareholders in the corporation and could have sold their shares at any time,

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unlike FITG shareholders who had no market for their shares until the merger closed. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 256. 291.

Defendant admits that all legacy SCI shareholders were diluted-including SCI's

majority shareholder, Fund III-as a byproduct of additional shares in NITG being issued. Defendant further admits that SCI's public status was likely a negative factor for the merger because it increased costs, audit fees, and the complexity of the deal. Defendant further admits that SCI's liquidity was insufficient for FITG's long term needs, and SCI's liquidity steadily shrank from 2004 through 2009 when the division representing legacy SCI went bankrupt during the historic collapse of the automotive market that saw GM and Chrysler declare bankruptcy. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 257. 292.

Defendant admits that SCI was the surviving company after the merger and that

SCI shareholders who did not agree with the merger, FITG's business plan, or that combining FITG and SCI was a good investment could have sold their shares at any time and were not "forced" to invest in NITG. Defendant further admits that investing in NITG was patently risky and that the risks were publicly disclosed. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 258. 293.

Defendant admits that as part of merger due diligence the SCI special committee

had access to FITG's internal forecasts, projections, budgets, and business plans, as well as any other materials it requested or believed necessary to evaluate the merger and exchange ratio. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 259.

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294.

Defendant admits that as part of merger due diligence the SCI special committee

had access to FITG's internal forecasts, projections, budgets, and business plans, as well as any other materials it requested or believed necessary to evaluate the merger and accompanying exchange ratio. Defendant further admits that with the exception of the independent directors named to the FITG and SCI special committees, SCI's and FITG's directors, officers, and management were interested in the transaction and could not have independently reviewed the transaction or negotiated the exchange ratio. Defendant further admits that SCI's interested directors approved the merger in reliance on the recommendation of the SCI special committee, as he is entitled to do under Delaware law. Defendant further admits that the SCI directors were familiar with FITG and, in their respective business judgment, believed in the merger made sense for FITG and SCI. Defendant further incorporates his responses to Paragraphs 233 through 240 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 260. 295.

Defendant admits that SCI was the surviving company after the merger and that

SCI shareholders who did not agree with the merger, FITG's business plan, or that combining FITG and SCI was a good investment could have sold their shares at any time. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 261. 296.

Defendant admits that Article Sixth of SCI's charter expressly authorized a

Continuing Director, like myself, to approve transactions like the merger. Defendant further admits that if the merger had been put to a super majority, minority shareholder vote, it still would have had to have been negotiated by me. Defendant further admits that institutional investors, like FURSA and Ramius, constituted a majority of the minority and, unlike myself, owed no fiduciary duties to the other minority shareholders and could have used that leverage to

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broker special deals or vote down appropriate transactions that other minority shareholders would have approved. Defendant further admits that FURSA and Ramius contemplated filing a lawsuit to enjoin the merger, but opted not to do so, implicitly voting in favor of the transaction. Defendant further incorporates his responses to Paragrapns 211-221 that show I was not co-opted or otherwise induced to approve the merger, waive the standstill provision, or to undertake any improper act.

Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 262. 297.

Defendant admits that SCI was the surviving company after the merger and that

SCI shareholders who did not agree with the merger, FITG's business plan, or that combining FIIG and SCI was a good investment could have protected their interests by selling their shares. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 263. 298.

Defendant admits that the SCI special committee was expressly authorized by

SCI's Articles of Incorporation to consider transactions like the merger. Except as expressly admitted and stated, Defendant denies the allegation "SCI Board Creates a Special Committee to Consider the Merger but it is Fatally Flawed" preceding Paragraph 264. 299.

Defendant admits that SCI formed the merger special committee on April 13,

2006, that WLR provided that committee with a proposal for the merger on May 30, 2006, and thus it was impossible for the SCI special committee to be formed "in response" to WLR's proposal as alleged in Paragraph 264. Defendant further admits that the SCI special committee formed to decide on the waiver of the standstill provision in the confidentiality agreement demanded that a merger special committee be formed if a potential transaction was sought

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between FITG and SCI.

Except as expressly admitted and stated, Defendant denies any

remaining allegations in Paragraph 264. 300.

Defendant admits that the SCI special committee for the merger was formed

because the prior special committee formed to review the request to waive the standstill provision required that a merger special committee be formed if a potential transaction was pursued by FITG and SCI. Defendant further admits that the SCI special committee for the merger was expressly authorized by SCI's charter to approve transactions like the merger, and would have had to negotiate the terms of the deal and the exchange ratio even if the merger was put to a super majority vote of minority shareholders who owed no fiduciary duties to the other minority shareholders. Defendant further states that the business judgment standard of review applies to this matter and, in the unlikely event that it does not, Plaintiffs bear burden to show that the transaction was not entirely fair. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 265. 301.

Defendant states that this is a legal conclusion that is not subject to admission or

denial. Defendant further states that the business judgment standard of review applies to this matter and, in the unlikely event that it does not, Plaintiffs bear burden to show that the transaction was not entirely fair. To the extent a response is possible, and except as expressly admitted and stated, Defendant denies the allegations in Paragraph 266. 302.

Defendant states that the allegation "Single Member Special Committee Is

Inherently Suspect Under Delaware Law" preceding Paragraph 267 is a legal conclusion not subject to admission or denial.

To the extent a response is possible, Defendant denies this

allegation. See, e.g. In re Energy, L.P. Unitholder Litig., No. 5816-VCP, 2010 WL 4273197, at *14 (Del. Ch. Oct. 29,2010) (approving one-person committee where only one director was

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independent: "This Court's entire fairness cases in the corporate context have recognized that it is often preferable to create a special committee with more than one director, but that doing so is not required to find that the special committee properly carried out its duties."). 303.

Defendant admits that the SCI special committee for the merger was formed

because the prior special committee formed to review the request to waive the standstill waiver required that a new special committee be formed if a potential transaction was pursued by FITG and SCI.

Defendant further admits that the SCI merger special committee was expressly

authorized by SCI's charter to approve transactions like the merger, and would have had to negotiate the terms of the deal and the exchange ratio even if the merger was put to a super majority vote of minority shareholders, shareholders who owed no fiduciary duties to the other minority shareholders. Defendant further states that the SCI special committee for the merger was not prospectively limited only to me. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 267. 304.

Defendant admits that the SCI special committee for the merger was formed

because the prior special committee formed to review the request to waive the standstill waiver required that a new special committee be formed if a potential transaction was pursued by FITG and SCI. Defendant further admits that WLR had no control or influence over the demand made by the SCI special committee reviewing the request to waive the standstill waiver. Defendant further admits that the SCI merger special committee was expressly authorized by SCI's charter to approve transactions like the merger, and would have had to negotiate the terms of the deal and the exchange ratio even if the merger was put to a super majority vote of minority shareholders, shareholders who owed no fiduciary duties to the other minority shareholders. Defendant further states that the SCI special committee for the merger was not prospectively

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limited only to me. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 268. 305.

Defendant incorporates his responses to Paragraphs 267-268 that show WLR and

Iessoni did not "engineer" an illicit SCI special committee, but that SCI's special committee for the merger was expressly provided for in SCI's Articles of Incorporation. Defendant further incorporates his responses to Paragraphs 211-221 that show that I was not co-opted or otherwise induced to approve the merger, waive the standstill provision, or to undertake any improper act. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 269. 306.

Defendant admits that FIIO's charter differed from SCI's charter in several

respects, including a provision that special committees be made up of two independent directors. Defendant further admits that FIIO's charter did not have anti-takeover provisions like SCI's charter-including requiring a supermajority of minority shareholders to approve a merger and/or limiting approvals of mergers to the Continuing Directors-provisions which had been added by the bondholders who acquired SCI out of bankruptcy. Defendant further states that FIIO waived its requirements concerning the number of directors of its merger special committee because it only had one independent director and, as SCI only had one independent director, believed that the transaction would be fairer if two single member special committees negotiated the transaction as compared to a multi-member special committee negotiating with a single member. Defendant further states that both special committee's single members were advised by independent legal and financial advisors, thereby muting the concerns of single person special committees.

Except as expressly admitted and stated, Defendant denies any

remaining allegations in Paragraph 270.

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307.

Defendant incorporates his response to Paragraph 270 that shows that the

concerns about single person special committees were addressed in the transaction here. Defendant further admits that adding additional independent directors to FITG's and SCI's board of directors was not a viable option because of the timing of the transaction, the cumbersome search required to find suitable candidates, and the likely unwillingness of suitable candidates to serve as an independent director under the circumstances. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 271. 308.

Defendant admits that adding additional independent directors to FITG's and

SCI's board of directors was not a viable option because of the timing of the transaction, the cumbersome search required to find suitable candidates, and the likely unwillingness of suitable candidates to serve as an independent director under the circumstances; as I explained: A. Well, to bring somebody in at that point would have taken some diligence, I believe. We would have had to vet the person, and I was comfortable that given my advisors and the empowerment given to the committee, that could move forward, apparently, since I did. Q. Do you recall being advised by your legal counsel that there were I don't know how to put it, that there were issues or challenges with a single-member special committee? A. I didn't need to be advised by anybody, Counsel. I was quite aware of it. (Tessoni Dep at 1092-93.) Defendant further admits that SCI's charter bestowed all power in approvmg additional Continuing Directors to the existing Continuing Director, myself, so that if I believed additional Continuing Directors were needed to examine the merger transaction, I could have independently taken steps to pursue that option. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 272.

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309.

Defendant incorporates his response to Paragraph 270 that shows that the

concerns about single person special committees were addressed in the transaction here. Defendant further states that this is a legal conclusion that is not subject to admission or denial. Defendam further states that single person special committees are permitted under Delaware law. See, e.g., In re Energy, L.P. Unitholder Litig., No. 5816-VCP, 2010 WL 4273197, at *14 (Del.

Ch. Oct. 29, 2010) (approving one-person committee where only one director was independent: "This Court's entire fairness cases in the corporate context have recognized that it is often preferable to create a special committee with more than one director, but that doing so is not required to find that the special committee properly carried out its duties."). To the extent a response is possible, and except as expressly admitted and stated, Defendant denies the allegations in Paragraph 273. 310.

Defendant incorporates his response to Paragraph 273 as though fully set forth

herein. Defendant further states that this is a legal conclusion that is not subject to admission or denial and, to the extent a response is possible, denies the allegations in Paragraph 274. 311.

Defendant incorporates his response to Paragraph 273 as though fully set forth

herein. Defendant further states that this is a legal conclusion that is not subject to admission or denial and, to the extent a response is possible, denies the allegations in Paragraph 275. 312.

Defendant incorporates his response to Paragraph 273 as though fully set forth

herein. Defendant further states that this is a legal conclusion that is not subject to admission or denial and, to the extent a response is possible, denies the allegations in Paragraph 276. 313.

Defendant admits that he served on multiple special committees before the

merger, was the chairman of SCI's audit committee, and had served on other Boards before SCI. Except as expressly admitted and stated, Defendant denies the allegation "Tessoni had

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Inadequate Experience and Expertise to Handle Such a Role by Himself' preceding Paragraph 277. 314.

Defendant states that this is a legal conclusion that is not subject to admission or

denial. Defendant further states that Delaware law does not set forth requirements of expertise to serve as a special committee member, and that single person special committees are permitted under Delaware law. See, e.g., In re Energy, L.P. Unitholder Litig., No. 58l6-VCP, 2010 WL 4273197, at *14 (Del. Ch. Oct. 29,2010) (approving one-person committee where only one director was independent: "This Court's entire fairness cases in the corporate context have recognized that it is often preferable to create a special committee with more than one director, but that doing so is not required to find that the special committee properly carried out its duties."). To the extent a response is possible, and except as expressly admitted and stated, Defendant denies the allegations in Paragraph 277. 315.

Defendant admits that he is a professor of accounting, hold a Ph.D. in accounting,

has served on boards of public companies, and has headed audit committees for corporations, including SCI and NITG. Defendant further admits that he served on special committees for SCI, including a single person special committee, before Fund III purchased its controlling interest in SCI. Defendant further admits that I was advised by and consulted with experienced advisors during the merger process. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 278. 316.

Defendant incorporates his responses to Paragraphs 277-278 as though fully set

forth herein, and denies any remaining allegations in Paragraph 279. 317.

Defendant incorporates his responses to Paragraphs 277-278 as though fully set

forth herein, and denies any remaining allegations in Paragraph 280.

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318.

Defendant incorporates his responses to Paragraphs 277-278 as though fully set

forth herein, and denies any remaining allegations in Paragraph 281. 319.

Defendant incorporates his responses to Paragraphs 277-278 as though fully set

forth herein, and denies any remaining allegations in Paragraph 282. 320.

Defendant incorporates his responses to Paragraphs 277-278 as though fully set

forth herein, and denies any remaining allegations in Paragraph 283. 321.

Defendant admits that the acquisition of BST by Fund III was a cash purchase,

not a stock-for-stock merger, of a privately held European company. Defendant further admits that the SCI special committee's advisors discounted FITG's projections, found them to be aggressive, and, unlike in the BST transaction, SCI's advisors based their valuation of FITG on a method that was not dependent on FITG's projections.

Defendant further incorporates his

responses to Paragraphs 277-278, and 350 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 284. 322.

Defendant states that an "earn-out" provision is not a basic concept in mergers

and acquisitions, and an "earn-out" provision was wholly inapplicable under the terms of the transaction here. Defendant further incorporates his responses to Paragraphs 277-278 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 285. 323.

Defendant admits that he, as college professor, co-authored a case study loosely

based on the facts of the merger years after it was completed to be used as a teaching tool for other academics to educate their students. Defendant further states that the merger was unusual, particularly employing the unique structure where two independent special committees were used to segregate all interested directors, officers, and management from the transaction and

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negotiate the exchange ratio without any input from the controlling shareholder. Defendant further states that the merger was unusual in that it had such strong processes in place to protect the minority shareholders.

Defendant further admits that Plaintiffs purport to quote and

paraphrase from Tessoni Depo. Ex. 80, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 286. 324.

Defendant admits that Plaintiffs purport to quote and paraphrase from Tessoni

Depo. Ex. 80, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Defendant further states that while the case study that he co-authored was based on the merger, we modified, embellished and emphasized certain features for teaching purposes. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraphs 287A-G. 325.

Defendant admits that the SCI Special Committee was advised by independent

legal and financial advisors, and the FITG Special Committee did not use or seek additional experts of a more specific nature.

Defendant further states that the SCI Special Committee

advisors addressed my questions and concerns about the merger, and that he had no reason to seek additional advisors for the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 288. 326.

Defendant admits that SCI had been shopped aggressively by its prior controlling

shareholder, Zapata, from 2004 to 2006 and, even with the help of a strategic marketing expert (Wachovia), Zapata could not sell all of SCI and ultimately had to sell the controlling interest in SCI at a discounted rate to a distressed investor.

Defendant further states that he does not

understand how he could shop the minority bloc in SCI, but Defendant admits that the minority

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shareholders were free to sell their shares at anytime. Defendant further admits that he was aware of the previous sales efforts concerning SCI, and that those sales efforts had been completed only a few months before the merger process began. Defendant further state that the SCI Special Committee advisors addressed his questions and concerns about the merger, and that he had no reason to seek additional advisors for the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 289. 327.

Defendant denies the allegation "Tessoni was not Independent or Disinterested as

to the Merger" preceding Paragraph 290. 328.

Defendant admits that he was independent and insulated from inf1uence from the

interested parties. Defendant further incorporates his responses to Paragraph 270 and 273 that show that single person special committees are permitted under Delaware law and that the concerns about single person special committees were addressed in the transaction here. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 290. 329.

Defendant admits that he was paid a f1at fee of $40,000 for his work on the SCI

Special Committee, and states that he would have received that payment whether or not he approved the merger, and he was not offered or paid any additional money contingent upon the merger's approval. Defendant further admits that he had no financial interest to approve the merger.

Defendant further incorporates his responses set forth in Paragraphs 211-221 that

evidence that I was not co-opted or otherwise induced to approve the merger, waive the standstill provision, or to undertake any improper act. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 291. 330.

Defendant admits that Plaintiffs purport to quote and paraphrase from Tessoni

Depo. Ex. 1 and Groga Depo. Exs. 291-292, that those document speaks for themselves, and

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Defendant denies any allegations inconsistent with them. Defendant further admits that he was paid a flat fee of $40,000 for his work on the SCI Special Committee, and that he would have received that payment whether or not he approved the merger, and he was not offered or paid any additional money contingent upon the merger's approval. Defendant further admits that had no financial interest to approve the merger, and was paid no money by WLR, Fund II, Fund III, Associates II, Associates III, or any individual defendant in this matter. Defendant further states that he did not expect to be retained on the combined company's board and that no communications were made to me about my future on NITG's board until after the merger was approved. (Tessoni Dep at 238-239.) Defendant further states that income earned by me as a director, head of the audit committee, and member of later special committees for NITG does not make me interested under Delaware law. In re Walt Disney Co. Derivative Litig., 731 A.2d 342, 360 (Del. Ch. 1998), rev'd on other grounds in Brehm v. Eisner, 746 A.2d 244 (Del. 2000) (fact that the salary a director defendant receives from her primary occupation is low compared to her director's fees and stock options is insufficient to demonstrate that a director lacks independence; holding otherwise would expressly overrule Delaware Supreme Court and preclude "regular folks'" membership on corporate boards). Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 292. 331.

Defendant admits that he was paid director fees for his work at SCI in 2006 that

paid him approximately $114,000, which was approximately the amount he earned as a college professor. Defendant further admits that 2006 was a very active year for SCI's Board and for me in particular because I served on the special committee concerning the merger, chaired many additional audit committee meetings because of late public filings and successor auditor issues exacerbated by Mr. Menezes while was interim CEO and CFO, and attended additional Board

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meetings resulting from the organizational changes in SCI. Defendant further admits that he was paid director fees for his service on NITG's Board after the merger closed, including work on additional special committees and as head of the audit committee. Defendant further states that he did not know about the fees paid that would be paid to him in 2007 and after when he approved the merger, and that these unknown fees were not why he approved the merger. Defendant further incorporates his response to Paragraph 292 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 293. 332.

Defendant admits that Mr. Ross had not made any decision about retaining me

until after the merger had been reviewed and the exchange ratio was negotiated. (Gorga Depo. Ex. 254.) Defendant states that he did not expect to be retained on the combined company's board and that no communications were made to him about his future on NITG's board until after the merger was approved. (Tessoni Dep at 238-239.) Defendant further incorporates his responses to Paragraphs 292-293 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 294. 333.

Defendant admits that he, like Mr. Gibbons, was a Class I Director and that his

term was due to expire at SCI's 2007 annual meeting, more than a year after the merger would have closed.

Except as expressly admitted and stated, Defendant denies any remaining

allegations in Paragraph 295. 334.

Defendant incorporate his responses to Paragraphs 292-295 as though fully set

forth herein, and denies any remaining allegations in Paragraph 296. 335.

Defendant states that income earned by him as a director, head of the audit

committee, and member of later special committees for NITG does not make him interested

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under Delaware law. In re Walt Disney Co. Derivative Litig., 731 A.2d 342, 360 (Del. Ch. 1998), rev'd on other grounds in Brehm v. Eisner, 746 A.2d 244 (Del. 2000) (fact that the salary a director defendant receives from her primary occupation is low compared to her director's fees and stock options is insufficient to demonstrate that a director lacks independence; holding otherwise would expressly overrule Delaware Supreme Court and preclude "regular folks'" membership on corporate boards). Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 297. 336.

Defendant states that the allegation "The SCI Special Committee was not

Allowed to Consider Other Transactions" preceding Paragraph 298 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 337.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 44, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that, in response to a request from WLR to waive the standstill provision, the SCI special committee demanded that a new merger special committee be formed to "review, evaluate, investigate, negotiate, and approve the terms of any Potential Transaction." Defendant further states that the SCI special committee independently made this demand knowing that (l) SCI could not be sold after two years of aggressive marketing, (2) SCI's controlling interest was sold at a discounted market rate to distressed investors, (3) the SCI special committee did not have the power to shop the entire company three months after its controlling interest was purchased by Fund III, (4) the costs of marketing SCI yet again would have been significant, and (5) the minority shareholders were free to sell their stock at anytime on the open market. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 298.

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338.

Defendant incorporates his response to Paragraph 298 showing that additional

marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Defendant further states that it is unclear how or what offers the SCI special committee was supposed to solicit or consider in the context of the merger or outside the controlling shareholder's purview. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 299. 339.

Defendant incorporate his response to Paragraph 298 showing that additional

marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Defendant further states that it is unclear how or what offers the SCI special committee was supposed to solicit or consider in the context of the merger or outside the controlling shareholder's purview. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 300. 340.

Defendant admits that the SCI special committee conducted an arm's length

negotiation during the merger, was not captive or beholden to the controlling shareholder during price negotiations, and that SCI's Charter gave the SCI special committee powerful leverage over the controlling shareholder. Defendant further admits that the interested directors, ot1icers, and management were segregated from the exchange ratio negotiations and that the FITG and SCI special committees engaged in independent, arm's length negotiations. Defendant further states that during the merger SCI was valued at a higher price than what Fund III paid for it in December 2005, and that an unat1iliated third party would have valued SCI at an even lower level than Fund III had since SCI's earnings had eroded by approximately 70% in the time between Fund Ill's purchase and the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 301.

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341.

Defendant admits that he testified that an alternative to the Ross transaction also

"could be discouraging" in that the open market could have yielded a lower price for SCI. (Tessoni Depo. at 840.)

Defendant further admits that marketing SCI was an expensive

proposition, and that the first sales efforts cost more than $500,000 in fees and resulted in no serious offers.

Defendant further admits that the combined company continued to pursue

additional transactions, including purchasing BST, a European based airbag manufacturer, that provided vertical integration and other synergies for SCI. Defendant further incorporates his response to Paragraph 298 showing that additional marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 302. 342.

Defendant states that the allegation "The SCI Special Committee was not Fully

Informed" preceding Paragraph 303 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 343.

Defendant admits that FITG's August 17, 2006 strategic plan ("Strategic Plan")

was provided by FITG management to the advisors to the special committees. Defendant further admits that the Strategic Plan was FITG's management's best good faith belief and projection of FITG's future business outlook.

Defendant further admits that this Strategic Plan included

certain synergistic acquisitions that management believed were very likely and had been previously disclosed to and discussed with the financial advisors for the special committees. Defendant further admits that Mr. Ross testified that including potential acquisitions in a strategic plan is not unusual.

(Ross Dep. at 259-61.) Defendant further admits that SCI's

projections provided to the special committees' advisors also contained business that had neither been obtained nor contractualized. Defendant further incorporates his responses to Paragraphs

- 80 ATI-249 I514vl


464-478 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 303. 344.

Defendant admits that on or about August 28, 2006, FITG management prepared

a projection to obtain sort term bank financing ("Bank Model"), and that the Bank Model was not intended to be, and never was, FITG's strategic plan. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 304. 345.

Defendant admits that the Bank Model was different from the Strategic Plan in

content and purpose, and that the Bank Model had lower projected earnings with less debt whereas the Strategic Plan had higher projected earnings with greater debt. Defendant further states that Plaintiffs purport to paraphrase and quote from Spradling Depo. Ex. 338, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 305. 346.

Defendant admits that the Bank Model was different from the Strategic Plan in

content and purpose, and that the Bank Model was not an appropriate model to use to value FITG for the merger. Defendant further incorporates his responses to Paragraphs 433-486 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 306. 347.

Defendant admits that the Strategic Plan included certain synergistic acquisitions

that management believed were likely and those potential acquisitions were disclosed to and discussed with the financial advisors for the special committees. (Choy Depo at 693-94; 753767.)

Defendant further admits that SCI's projections provided to the special committees'

advisors also contained business that had neither been obtained nor contractualized. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 307.

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348.

Defendant states that the allegation "The Special Committee's Financial Advisor

was Inadequate" preceding Paragraph 308 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 349.

Defendant denies that a "sister company" of RSM (whatever Plaintiffs mean by

that term) had "deep relationships with FITG." Except as expressly denied, Defendant is without knowledge to admit or denies the remaining allegations in Paragraph 308. 350.

Defendant states that the allegations in Paragraph 309 state a legal conclusion that

is not subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 309. 351.

Defendant admits that he testified that he did not feel any pressure from WLR.

(Tessoni Depo. at 285.) Except as expressly admitted and stated, Defendant denies the allegation "The Pressure on Tessoni - The Selection of RSM" preceding Paragraph 310. 352.

Defendant admits the allegations in Paragraph 310.

353.

Defendant admits that Wachovia, believing it had a conflict, declined to serve as

an advisor to the SCI special committee. Defendant further admits that Raymond James was suggested as a potential financial advisor for the SCI special committee, but that the SCI special committee instead selected RSM. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 311. 354.

Defendant admits that he testified that he did not feel any pressure from WLR.

(Tessoni Depo. at 285 ("[D]id you feel that you were under pressure from Ross? A Absolutely not.").) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 312.

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355.

Defendant admits that he testified that he was not getting daily calls and that the

remarks made in Tessoni Depo. Ex. 84 were "probably an exaggeration." (Tessoni Depo. at 1012-13.) Defendant further admits that the merger could not move forward until the SCI special committee had a financial advisor in place, and that delays to the merger could potentially harm SCI's business. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 313. 356.

Defendant admits that he testified about Tessoni Depo. Ex. 85 as follows: Q. Dr. Tessoni, had you been, quote, pounded upon relentlessly by a Mr. Wax? A Maybe, not to the extent where I felt like I needed medical assistance. So he was very outspoken about his view of how the transaction was proceeding per prior discussions in this deposition.

Q And did-A So when I moved from discussing it with him to discussing it with counsel, I may have been prone to a bit of enhancement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 314. 357.

Defendant admits that Mr. Wax testified about Wax Depo. Ex. 455 as follows: Dan, I hate to plead, but you must get Nixon Peabody to start being responsive to someone other than themselves. I should not have to -- it should not have taken almost a month to replace Wachovia. I am under tremendous pressure to get the S-4 tiled after the debacle with the Q. Please persuade or order Nixon Peabody to be responsive and timely. (Wax at 532, reading from Ex. 455.)

Defendant further admits that this email was sent after multiple requests for Nixon Peabody to provide a revised draft of the merger agreement. Defendant further admits that the "debacle with the Q" concerned SCI's late tiling of its 10-Q while Mr. Menezes was interim CEO and CFO. Defendant further admits that completing the merger was important to both FITG's and SCI's

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businesses. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 315. 358.

Defendant admits that RSM was engaged by the SCI special committee.

Defendant further admits that he testified that he did not feel any pressure from WLR. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth about why RSM was engaged by the SCI special committee or the precise date of RSM's engagement. 359.

Defendant states that the allegation "RSM's Lack of Experience and Potential

Conf1ict of Interest" preceding Paragraph 317 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 360.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 317. 361.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 318. 362.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 319. 363.

Defendant admits that Plaintiffs purport to quote and paraphrase from Choy Depo.

Ex. 85, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 320. 364.

Defendant admits that Plaintiffs purport to quote and paraphrase from Choy Depo.

Ex. 78, that document speaks for itself, and Defendant denies any allegations inconsistent with it.

- 84ATI-2491514vI


Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 321. On information and belief as to these matters, Defendant admits that RSM bid on

365.

additional fairness opinion work related to NITG's acquisition of BST, that RSM was not hired to do that work, and that hiring decision was made by the NITG special committee without input from WLR or any interested directors, officers, or managers. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 322. 366.

Defendant admits that the fairness opinion work related to NITG's acquisition of

BST was done by SunTrust Robinson Humphrey, which had advised FITG's special committee during the merger, and that hiring decision was made by the NITG special committee without input from WLR or any interested directors, officers, or managers. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 323. 367.

Defendant admits that NITG's special committee made the hiring decisions about

its advisors without input from WLR or any interested directors, officers, or managers. Defendant further admits that he had no agreement with RSM about giving it additional work after the merger and RSM was not hired to do further fairness opinion work after the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 324. 368.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen, not RSM, did certain accounting work converting accounting practices for BST

subsidiaries to comply with U.S. GAAP. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 325. 369.

Defendant denies the allegations in Paragraph 326.

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370.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 327. 371.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen was involved in auditing FITG's pension plan and generally advised FITG concerning

Sarbanes-Oxley compliance. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 328. 372.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen was involved in auditing FITG's pension plan.

Except as expressly admitted and

stated, Defendant denies any remaining allegations in Paragraph 329. 373.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 330. 374.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 331. 375.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen had audited Cone Mills pension plan and had been auditing FITG's pension plan tor

approximately two years at the time of the merger. Defendant further admits that RSM did not work for FITG before the merger, and that the SCI special committee hired RSM without input from WLR or any interested directors, officers, or managers. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 332. 376.

On information and belief as to these matters, Defendant admits that Mr. Smith,

while at Cone Mills and FITG, worked with various partners and employees of McGladrey & Pullen. Defendant further admits that RSM did not work for FITG before the merger, and that the SCI special committee hired RSM without input from WLR or any interested directors,

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officers, or managers. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 333. 377.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen, not RSM, did certain accounting work converting accounting practices for BST

subsidiaries to comply with U.S. GAAP. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 334. 378.

On information and belief as to these matters, Defendant admits that no one from

RSM McGladrey, Inc., McGladrey & Pullen, or RSM made any report or presentation to FITG's Board on August 17, 2006. Defendant further admits that no one from RSM McGladrey, Inc., McGladrey & Pullen, or RSM ever reported to FITG's Board about the merger. Defendant further admits that Plaintiffs purport to paraphrase and quote from Wax Depo. Ex. 465, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 335. 379.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 336. 380.

Defendant further admits that Plaintiffs purport to paraphrase and quote from

Tessoni Depo. Ex. 16, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 337. 381.

Defendant further admits that Plaintiffs purport to paraphrase and quote from

Tessoni Depo. Ex. 84, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 338.

- 87 ATl-2491514vl


382.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 339. 383.

Defendant denies the allegations in Paragraph 340.

384.

On information and belief as to these matters, Defendant admits that McGladrey

& Pullen had audited Cone Mills pension plan and had been auditing FITG's pension plan for

approximately two years at the time of the merger. Defendant further admits that Mr. Smith, while at Cone Mills and FITG, worked with various partners and employees of McGladrey & Pullen. Defendant further admits that RSM did not work for FITG before the merger, and that the SCI special committee hired RSM without input from WLR or any interested directors, officers, or managers. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 341. 385.

Defendant states that the allegation "The RSM Engagement Agreement -

Limitations Rendered it of 'Questionable Reliability'" preceding Paragraph 342 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 386.

Defendant further admits that PlaintifIs purport to paraphrase and quote from

Choy Depo. Ex. 13, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 342. 387.

Defendant states that the allegations in Paragraph 343 are a legal conclusion that

is not subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 343. 388.

On information and belief as to these matters, Defendant admits that FITG

management provided accurate and complete information to the due diligence room and the

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special committee advisors. Defendant further admits that FITG management had many follow up conversations and communications with the advisors for the special committees concerning the information provided to them during due diligence for the merger. Defendant further admits that Plaintiffs purport to paraphrase and quote from Choy Depo. Ex. 60, that document speaks for itself, and Defendant denies any allegations inconsistent with it.

Except as expressly

admitted and stated, Defendant denies any remaining allegations in Paragraph 344. 389.

Defendant states that he is without knowledge or information to form a belief as

to the truth of the allegation "RSM Questioned but did not 'Vet' FITG Numbers, violating Normal Practice" preceding Paragraph 345. 390.

Defendant admits that RSM had one several hours long in person meeting with

FITG management, and many follow up communications via telephone and email. Defendant further admits that FITG management expected the special committee advisors to test FITG's projections, run sensitivity analyses, and reach their own independent conclusions. Defendant further admits that Plaintiffs purport to paraphrase and quote from Mr. Choy's deposition testimony, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 345. 391.

Defendant incorporates his response to Paragraph 345 as though fully set forth

herein. Defendant further admits that Plaintiffs purport to paraphrase and quote from Tessoni Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 346.

- 89 ATl-2491514vI


392.

Defendant admits that Plaintiffs purport to paraphrase and quote from Mr. Choy's

deposition testimony, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 347. 393. herein.

Defendant incorporates his response to Paragraph 345 as though fully set forth

Defendant admits that Plaintiffs purport to paraphrase and quote from Mr. Choy's

deposition testimony, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 348. 394.

Defendant admits that Plaintiffs purport to paraphrase and quote from Mr. Wax's

deposition testimony, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that the nature, breadth, and type of diligence performed varies from deal to deal. (Wax Depo. at 237-38.) Defendant further admits that FITG management expected the special committee advisors to test FITG's projections, run sensitivity analyses, and reach their own independent conclusions. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 349. 395.

On information and belief as to these matters, Defendant admits that Fund III

acquired BST and that a financial advisor familiar with the automotive market was engaged as part of that acquisition.

Defendant further admits that the financial advisor for the BST

transaction conducted a sensitivity analysis of the seller's projections for BST.

Defendant

further admits that FITG management expected the special committee advisors to test FITG's projections, run sensitivity analyses, and reach their own independent conclusions. Defendant further admits that RSM was hired by the SCI special committee without input from WLR or any

- 90ATI-2491514vI


interested directors, officers, or managers. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 350. 396.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 351. 397.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 352. 398.

Defendant admits that FITG's Strategic Plan projected improved growth rates

based on, among other things, lower costs of operating in foreign countries, improved margins, and increased market share. Defendant further admits that FITG's Strategic Plan was developed in conjunction with input from its customers and market experts who supported the projections. (Smith Depo. at 434-441.) Defendant further admits that certain business partners believed FITG's Strategic Plan's growth rates and projections were too conservative. (Jd.) Defendant further admits that FITG's constituent businesses previously had more than $3 billion in sales, FITG was a preferred supplier for its customers, and FITG expected to recapture a portion of that lost business. Defendant further admits that Plaintiffs purport to paraphrase and quote from Choy Depo. Ex 58, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 353. 399.

Defendant denies the allegations in Paragraph 354.

400.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

Ex 472, which is a duplicate of Ross Depo. Ex. 779, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Ross testified about Ross Depo. Ex. 779 as follows:

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A That is not what it says here. It says to risk SCI and BST. BST was a 200-odd million dollar commitment. It's much bigger than SCI. Q Well, part of that statement is to risk SCI, isn't it? A That's part of it, but it's not the whole statement, and it's not therefore accurate the way you read it. Q You raised it -- I'm sorry. A What I am talking about is three things. The ITG [direct] commitment by us, and the SCI and the BST, and the context for that, if you look up above in that paragraph, is I am still on this question, is this going to work for the big IPQ. That's why I am saying, if something like it is not achieved, no one will believe the 2008 numbers, let alone put a multiple. UBS and Goldman had indicated to us that late in '07, investors would be willing to value it based on a multiple of2008 EBITDA. So what I am saying here is, if we don't get to something like that, the underwriting won't work. This is really talking as much about the underwriting as it is about anything else. And as I say, at the end ofthe day, he [Wax] convinced me, and you would be able to find a fairly similar, maybe not the same word for word, but fairly similar e-mails by me to whoever is the point person on whatever deal we are doing as we get to the last minute. (Ross Depo. at 567-68.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 356. 401.

Defendant admits that the SCI special committee negotiated the merger agreement

at arm's length and found it to be fair to SCI's minority shareholders. Defendant further admits that the merger agreement included significant representations and warranties that were added at the instance of the SCI special committee. Except as expressly admitted and stated, Defendant denies the allegations "The Merger Agreement - Unfair to SCI" and "WLR Refuses to Provide Warranties" preceding Paragraph 356.

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402.

Defendant admits that Nixon Peabody, counsel for SCI's special committee,

significantly revised the draft merger agreement circulated by WLR's counsel, and that Nixon Peabody added many provisions that were ultimately included in the final merger agreement, including sections 3.l(g)(ii), 0), (o-z) (representations and warranties); 6.2(e) (MAC clause); and Article VIII (established indemnities). Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 356. 403.

Defendant admits that on or about August 9, 2006, the SCI special committee cut

ofT negotiations concerning the merger agreement based on WLR's refusal to provide fair and meaningful post-closing indemnity protections for SCI in the event there was a breach of the representations and warranties of the merger agreement. Defendant further admits that Nixon Peabody added many provisions that were ultimately included in the final merger agreement, including sections 3.1 (g)(ii), (j), (o-z) (representations and warranties); 6.2(e) (MAC clause); and Article VIII (established indemnities). Defendant further admits that since the merger agreement was signed and the merger closed, there have been no breaches of the representations and warranties in the merger agreement.

Defendant further admits that PlaintifIs purport to

paraphrase and quote from Tessoni Depo. Ex 61, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 357. 404.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 358.

- 93 ATl-2491514vl


405.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 359. Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

406.

Depo. Ex 61, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 360. 407.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 361. 408.

Defendant admits that PlaintifIs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 362. 409.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 363. 410.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent

- 94ATI-2491514vl


with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 364. 411.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 61, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 365. 412.

Defendant admits the allegations in Paragraph 366.

413.

Defendant admits that Plaintiffs purport to paraphrase and quote from Choy Depo.

Ex 25, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Smith testified that his phone call to RSM was to keep the process moving in order to reduce fees and expenses associated with the merger and: My feeling was in this particular situation, I was just mentioning to him that he should continue progress. Did not see the offense to the phone call that he did because I was not in -- as you can see from the text, wasn't trying to shape the opinion and what the opinion said in any manner and obviously was willing to provide additional detail. So he took from a process viewpoint, he may have been absolutely correct; but I had no ill intent in making the phone call. Just trying to say, "Let's keep the process moving." (Smith Depo at 589-90.) Defendant further admits that Mr. Smith testified that when Mr. Choy said "certainty of close" that '''close' doesn't necessarily mean a successful close, but you either put an end to it one direction or the other." (Smith Depo. at 590-91.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 367. 414.

On information and belief as to these matters, Defendant admits that FITG was

not a client of RSM, that RSM personnel spoke to FITG management many times during the diligence process, and that communications between RSM and FITG do not demonstrate a "long standing close relationship with [RSM's] sister company." Defendant further incorporates his

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responses to Paragraphs 327-333 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 368. 415.

Defendant admits that Plaintiffs purport to paraphrase and quote from Choy Depo.

Ex 25, that document speaks for

itselt~

and Defendant denies any allegations inconsistent with it.

Defendant further admits that that Nixon Peabody added many provisions that were ultimately included in the final merger agreement, including sections 3.1 (g)(ii), (j), (o-z) (representations and warranties); 6.2(e) (MAC clause); and Article VIII (established indemnities). Defendant further admits that since the merger agreement was signed and the merger closed, there have been no breaches of the representations and warranties in the merger agreement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 369. 416.

Defendant incorporates his response to Paragraph 367 as though fully set forth

herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 370. 417.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 64, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that he and Mr. Ross discussed resolutions of the indemnity issue, counsel for both parties negotiated a mutually acceptable resolution, and that resolution was incorporated in the final merger agreement.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 371. 418.

Defendant admits that Plaintiffs have not brought a fraud claim against

Defendant, have not identified any fraudulent statements or actions by Defendant, and that Delaware law creates remedies for defrauded shareholders that would be available in addition to

- 96ATl-2491514vl


the indemnity provisions set forth in the merger agreement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 372. 419.

Defendant admits that PlaintifIs purport to paraphrase and quote from Tessoni

Depo. Ex 65, that document speaks for itself, and Defendant denies any allegations inconsistent with it.

Defendant further admits that Plaintiffs have not brought a fraud claim against

Defendant, have not identified any fraudulent statements or actions by Defendant, and that Delaware law creates remedies for defrauded shareholders that would be available in addition to the indemnity provisions set forth in the merger agreement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 373. 420.

Defendant admits the allegations in Paragraph 374.

421.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 13, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 375. 422.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex 13, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 376. 423.

Defendant admits that PlaintifIs purport to paraphrase and quote from Tessoni

Depo. Ex 13, that document speaks for

itselt~

and Defendant denies any allegations inconsistent

with it. Defendant further admits that he was the Stockholder Representative for SCI under the escrow agreement. Defendant further admits that since the merger agreement was signed and the merger closed, there have been no breaches of the representations and warranties in the merger

- 97 ATl-2491514vl


agreement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 377. 424.

Defendant denies the allegations in Paragraph 378.

425.

Defendant admits that Plaintiffs have not brought a fraud claim against

Defendant, have not identified any fraudulent statements or actions by Defendant, and that Delaware law creates remedies for defrauded shareholders that would be available in addition to the indemnity provisions set forth in the merger agreement. Except as expressly admitted and stated, Defendant denies the allegation "The Indemnity Did Not Exclude Fraud" preceding Paragraph 379. 426.

Defendant admits that Plaintiffs have not brought a fraud claim against him, have

not identified any fraudulent statements or actions by him, and that Delaware law creates remedies for defrauded shareholders that would be available in addition to the indemnity provisions set forth in the merger agreement.

Except as expressly admitted and stated,

Defendant denies any remaining allegations in Paragraph 379. 427.

Defendant denies the allegation that "The Indemnity was Less Valuable the

Greater the Breach" preceding Paragraph 380. 428.

Defendant denies the allegations in Paragraph 380.

429.

Defendant denies the allegation that "The Indemnity Disproportionately

Disadvantaged SCI" preceding Paragraph 381. 430.

Defendant denies the allegations in Paragraph 381.

431.

Defendant admits that SCI was a public company and made public filings under

SEC regulations.

Defendant further admits that FITG was a private company and that

- 98ATI-2491514vl


information about FITG was made public beginning August 30, 2006.

Except as expressly

admitted and stated, Defendant denies any remaining allegations in Paragraph 382. 432.

Defendant admits that the FITG and SCI special committees conducted extensive

due diligence on FITG and SCI as part of the merger process. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 383. 433.

Defendant admits that the SCI special committee conducted extensive due

diligence on FITG as part of the merger, had a detailed understanding of FITG and its business, and could judge the risks associated with FITG and the provisions in the merger agreement. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 384. 434.

Defendant denies the allegation that "No Truly Independent Board Representative

Protected the SCI Minority Shareholders" preceding Paragraph 385. 435.

Defendant denies the allegations in Paragraph 385.

436.

Defendant admits that he was independent and adversarial while serving on the

SCI special committee, and was not improperly influenced by any of the interested directors, officers, or managers of FITG or SCI. Defendant further admits that he was not pressured whatsoever by an interested director, officer, or manager of FITG or SCI. (Tessoni Depo at 815.) Defendant further admits that he was paid a f1at fee of $40,000 for his work on the SCI Special Committee, and that he would have received that payment whether or not he approved the merger, and he was not offered or paid any additional money contingent upon the merger's approval. Defendant further admits that he had no financial interest to approve the merger, and was paid no money by WLR, Fund II, Fund III, Associates II, Associates III, or any individual defendant in this matter. Defendant further admits that his role as director of NITG provided

- 99ATI-2491514vl


him with detailed financial information about NITG, and allowed him to simultaneously fulfill his role as the SCI Stockholder Representative while serving as a NITG director. Defendant further admits that he was the Stockholder Representative for SCI under the escrow agreement. Defendant further admits that since the merger agreement was signed and the merger closed, there have been no breaches of the representations and warranties in the merger agreement, and Plaintiffs have failed to identify any. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 386. 437.

Defendant admits that his role as director and chairman of the audit committee for

NITG provided him with detailed financial information about NITG and allowed him to simultaneously fulfill his role as the SCI Stockholder Representative while serving as a NITG director. Defendant further admits that he testified as follows: Q. Did you -- what did you do to monitor and fairly administer claims of the SCI shareholders?

A Well, on a go-forward basis, subsequent -- ... to the transaction, I was chairman of the audit committee. That certainly was a big, big part of my ability to observe what was happening. I was on the board of directors, and so from that perspective, it was -- a lot of information was available for me to evaluate, monitor, if you will, on behalf of the minority shareholders. (Tessoni Depo. at 922-23 [emphasis added].) Defendant further admits that he did not "consider" making a claim on behalf of SCI's minority shareholders for indemnification because he determined, based on the information available to him, that no claim was necessary: Q. Did you consider making a claim on behalf of the minority shareholders?

A Well, in the context of my role, I would have determined whether a claim was necessary. And it never came to a claim is necessary. (Tessoni Depo. at 923.)

*

*

* - 100 -

ATI-2491514vl


Q. Did you ever consider, in light ofITG's performance after the merger, that a claim could be made, might be appropriate? A No. I mean, given the reps and warranties that I was -- that were in the documents, I didn't believe any of them were ever breached. Q Did you ever consider making a claim? A I think I constantly considered the fact that I was responsible to determine whether any reps or warranties were breached. So when I would see what was going on, I would be aware that if something that I needed to consider, if there were violations of the reps and warranties occurring, that needed to be looked into. Q Did you ever specifically consider making a claim? A I never saw anything that led me to believe a claim was appropriate to consider. (Tessoni Depo. at 924-25 [emphasis added].) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 387. 438.

Defendant states that the allegation "No Earn-Out on the Consideration to FITG"

preceding Paragraph 388 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 439.

Defendant admits that SCI failed to meet the near term (or long term) earnings

projections that it represented that it would during the merger. Defendant further admits that an "earn-out" structure (whatever Plaintiffs mean by that term) is cumbersome and virtually unworkable in a stock-far-stock merger. Defendant further states that the alleged "earn-out" structure is a brainchild of Plaintiffs' counsel, was first raised after this lawsuit was filed, and is unclear how it would operate in the context of the facts surrounding the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 388.

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440.

Defendant denies the allegation "No Real Protection for SCI for False FITG

Information" preceding Paragraph 389. 441.

Defendant admits that Plaintiffs have not identified any false or misleading

information provided by FITG. Defendant further admits that Plaintiffs have not sued Defendant for providing false or misleading information. Defendant further admits that SCI shareholders had significant legal remedies against Defendant for providing false or misleading information, including raising such issues in this lawsuit, but Plaintiffs declined to do so. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 389. 442.

Defendant states that the allegation "No Fiduciary Duty Out" preceding Paragraph

390 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 443.

Defendant admits that the merger agreement did not contain a provision that

would have allowed for the cancellation of the agreement in the event it caused a breach of fiduciary duty. Defendant further admits that no breach of fiduciary duty occurred that would have required the cancellation of the merger agreement. Defendant further admits that none of the interested Defendants "controlled the transaction" because the power to approve the merger was exclusively given to either a supermajority of minority shareholders or the Continuing Director. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 390. 444.

Defendant states that the allegation "No Go-Shop Provision" preceding Paragraph

391 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation.

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445.

Defendant admits that (1) SCI could not be sold after two years of aggressive

marketing, (2) SCI's controlling interest was sold at a discounted market rate to distressed investors, (3) the SCI special committee did not have the power to shop the entire company three months after its controlling interest was purchased by Fund III, and (4) the minority shareholders were free to sell their stock at anytime on the open market if they disagreed with the exchange ratio or the merger. Defendant further admits that during the merger SCI was valued at a higher price than what Fund III paid for SCI in December 2005, and that an unaffiliated third party would have valued SCI at an even lower level than Fund III in a "go shop" situation since SCI's earnings had eroded by approximately 70% in the time between Fund Ill's purchase and the merger. Defendant further admits that undertaking a costly, time consuming, and pointless sales effort to reaffirm the market's disinterest in purchasing SCI was unnecessary for the SCI Board to fulfill its fiduciary duties in light of the SCI Board's inability to sell the company in the two years before the merger.

Except as expressly admitted and stated, Defendant denies any

remaining allegations in Paragraph 391. 446.

Defendant denies the allegation "FITG and WLR Improperly Communicated with

RSM" preceding Paragraph 392. 447.

Defendant admits that Mr. Smith testified that his phone call to RSM was to keep

the process moving in order to reduce the fees and expenses associated with the merger, and: My feeling was in this particular situation, I was just mentioning to him that he should continue progress. Did not see the offense to the phone call that he did because I was not in -- as you can see from the text, wasn't trying to shape the opinion and what the opinion said in any manner and obviously was willing to provide additional detail. So he took from a process viewpoint, he may have been absolutely correct; but I had no ill intent in making the phone call. Just trying to say, "Let's keep the process moving." (Smith Depo at 589-90.)

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Defendant further admits that Mr. Smith testified that when Mr. Choy said "certainty of close" that "'close' doesn't necessarily mean a successful close, but you either put an end to it one direction or the other." (Smith Depo. at 590-91.) Defendant further admits that this phone call had no effect on the merger or the exchange ratio, and had no improper ramifications on the merger. Defendant further admits that RSM personnel spoke to FITG management many times during the diligence process, and that communications between RSM and FITG do not demonstrate an "inappropriate relationship between Smith/FITG and RSM." Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 392. 448.

Defendant denies the allegations in Paragraph 393.

449.

Defendant admits that Plaintiffs purport to paraphrase and quote from Ross Depo.

Ex. 740, that document speaks for itself, and Defendant denies any allegations inconsistent with it.

Defendant further admits that Mr. Ross testified that he believed that the reference to

financial advisors in Ross Depo. Ex 740 concerned the BST transaction, not the merger of SCI and ITG. Defendant further admits that the merger financial advisors had nothing to "sign off' on as negotiations for the exchange ratio had not begun by August 18, 2006. Defendant further states that communications between interested parties and the financial advisors for the special committees are not de facto inappropriate or improper. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 394. 450.

Defendant admits that Wax Depo. Ex. 468 states that Mr. Wax was "scheduled to

speak with both FA's [financial advisors] today," but does not indicate if he actually did speak with them. Defendant further admits that Mr. Wax testified that he did not recall speaking with them: Q. Do you have any recollection of actually speaking to them? A.No.

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Q. Why would you have called them or spoken to them in person, however, you spoke to them? A. Well, since I don't have a recollection, I don't know how to answer your question. (Wax Depo at 589.) Defendant further states that communications between interested parties and the financial advisors for the special committees are not defacto inappropriate or improper. Defendant further incorporates his response to Paragraph 394 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 395. 451.

Defendant admits that the FITG special committee opened negotiations by asking

for an exchange ratio that would provide FITG shareholders with more than 70% of the combined company. Defendant further admits that the SCI special committee negotiated that initial offer down by 7%.

Except as expressly admitted and stated, Defendant is without

knowledge or information to form a belief as to the truth of the allegation "FITG Requests a Higher Share of the Combined Company" preceding Paragraph 396. 452.

Defendant admits that the proposed exchange ratio formula, at the time the

Prospectus was filed, would have yielded an exchange ratio of FITG shareholders owning 61.8% and SCI shareholders owning 38.2% of the combined company because FITG's balance sheet changed between March and September 2006. Defendant further admits that as of May 30, 2006, the proposed exchange ratio formula would have yielded an exchange ratio of FITG shareholders owning approximately 63% and SCI shareholders owning approximately 37% of the combined company. Defendant further admits that May 30, 2006 proposal from WLR to the FITG and SCI special committees included a proposed exchange ratio formula to serve as a reference point for the special committees and was not used to calculate the agreed upon exchange ratio for the merger. Defendant further admits that the May 30, 2006 proposal stated that FITG shareholders "would own approximately 65% of the post-Merger entity," was

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included for example purposes only, and was not controlling on the special committees. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 396. 453.

Defendant admits that the May 30, 2006 proposal stated that FITG shareholders

"would own approximately 65% of the post-Merger entity," and that this was not a misprint. Defendant further incorporates his response to Paragraph 396 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 397. 454.

Defendant admits that the FITG special committee opened negotiations by asking

for an exchange ratio that would provide FITG shareholders with more than 70% of the combined company. Defendant further admits that the SCI special committee negotiated that initial offer down by 7%.

Defendant further incorporates his response to Paragraph 396 as

though fully set forth herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 398. 455.

Defendant admits that the negotiations for the exchange ratio were not completed

by August 22, 2006. Defendant further admits that Plaintiffs purport to paraphrase and quote from Choy Depo. Ex. 33b, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 399. 456.

Defendant admits that during exchange ratio negotiations the FITG special

committee stated that FITG had $100 million in assets that were not reflected on its books because accounting rules required that certain assets be carried on FITG's books at zero value due to FITG's constituent companies-Burlington Industries and Cone Mills-being purchased out of bankruptcy. Defendant further admits that these off book assets were the principle basis

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for the FITG special committee opening negotiations with an exchange ratio that would provide FITG shareholders with more than 70% of the combined company.

Defendant admits that

Plaintiffs purport to paraphrase and quote from Tessoni Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 400. 457.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 401. 458.

Defendant states that the allegation "RSM Document Shows FITG Not Worth

What had Already Been Proposed" preceding Paragraph 402 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 459.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 22, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 402. 460.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 22, which is a duplicate of Ross Depo. Ex. 770, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Tessoni Depo. Ex. 22 was a draft negotiating script that was later revised and used by the SCI special committee and its advisors in negotiating the exchange ratio. Defendant further admits that Mr. Ross testified that this draft negotiating script took the most extreme position possible to advocate on behalf of SCI:

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A. Well, that's a matter of -- this, this fellow is applying this in a negotiating context to respond to some proposal that lTG's committee had made to him. So, this looks to me like a negotiating piece, trying to take the most extreme position he can come up with in order to be an advocate on behalf of SCI. That's how I read this whole document.

Q Okay. Next bullet point: "lTG's current levels of earnings, EBITDA, EBIT and net income do not support the implied equity valuation given to ITG." Would you have agreed with that? A No. No. But again, this looks to me like him trying to list bullet points that they should use as negotiating topics to try to refine the deal with ITG. Q Did you-A The more you read me the bullet points, the more convinced I become that that is what this really is. (Ross Depo. at 507-08.) Defendant further admits that Mr. Ross testified that his belief was that Tessoni Depo. Ex. 22 was RSM's "proposed script for negotiating with ITG" and was not "a value conclusion," but a "sort of in argument negotiating document." (Ross Depo. at 508-09.) Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 403A-M. 461.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 22, which is a duplicate of Ross Depo. Ex. 770, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Tessoni Depo. Ex. 22 was a draft negotiating script that was later revised and used by the SCI special committee and its advisors in negotiating the exchange ratio and took the most extreme position possible to advocate on behalf of SCI. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 404.

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462.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 23, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Tessoni Depo. Ex. 23 was a negotiating script that was used by the SCI special committee and its advisors in negotiating the exchange ratio and took the most extreme position possible to advocate on behalf of SCI. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 405A-F. 463.

Defendant states that the allegation "Tessoni Caved and Agreed to Higher Split

for FITG" preceding Paragraph 406 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 464.

Defendant admits the allegations in Paragraph 406.

465.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 407. 466.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 408. 467.

Defendant admits that the FITG special committee opened negotiations by asking

for an exchange ratio that would provide FITG shareholders with more than 70% of the combined company. Defendant further admits that the SCI special committee negotiated that initial offer down by 7%. Defendant further incorporates his response to Paragraph 396 as

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though fully set forth herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 409. 468.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Tessoni Depo. Ex. 23 was a negotiating script that was used by the SCI special committee and its advisors in negotiating the exchange ratio and took the most extreme position possible to advocate on behalf of SCI. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 410. 469.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 411. 470.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 412. 471.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 413. 472.

Defendant admits that on August 23,2006, the FITG and SCI special committees

agreed to an exchange ratio, subject to approval by their respective advisors that it was fair to the minority shareholders, where FITG shareholders would receive 65% of the combined company and SCI shareholders would receive 35% of the combined company.

Except as expressly

admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 414.

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473.

Defendant denies the allegation "By Agreeing to FITG's Request, Tessoni

Assured Himself a Seat on the Board of the Combined Company, Thereby Protecting his Board Income" preceding Paragraph 415. 474.

Defendant admits that an exchange ratio resulting in a 65/35 split of the combined

company's stock was agreed to on August 23, subject to the approval by the respective special committee advisors that it was fair to the minority shareholders. Defendant further admits that SCI's special committee did not formally approve of this exchange ratio until August 28. Defendant further admits that Plaintiffs purport to paraphrase and quote from Tessoni Depo. Ex. 14 and Duerk Depo. Ex. 1, those document speaks for themselves, and Defendant denies any allegations inconsistent with them. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 415. 475.

Defendant admits that that mutual indemnification provISIOn

ill

the merger

agreement and the exchange ratio were in SCI's interest. Defendant further incorporates his response to Paragraphs 290-297 which show that he did not approve the merger in exchange for a board position and that, under Delaware law, fees earned in his role as director of NITG after the merger was approved does not render him interested at the time of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 416. 476.

Defendant incorporates his responses to Paragraphs 290-297 which show that he

did not approve the merger in exchange for a board position and that, under Delaware law, fees earned in his role as director of NITG after the merger was approved does not render him interested at the time of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 417.

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477.

Defendant admits that he, like Mr. Gibbons, was a Class I Director and that his

term was due to expire at SCI's 2007 annual meeting, more than a year after the merger would have closed. Defendant further admits that he did not expect to be retained on the combined company's board and that no communications were made to him about his future on NITG's board until after the merger was approved. (Tessoni Dep at 238-239.) Defendant further admits that Mr. Ross had not made any decision about retaining me until after the merger had been reviewed and the exchange ratio was negotiated. (Gorga Depo. Ex. 254.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 418. 478.

Defendant states that Plaintiffs' sole basis for this allegation is that he was paid

director fees after the merger. Defendant further incorporates his response to Paragraphs 290297 which show that he did not approve the merger in exchange for a board position and that, under Delaware law, fees earned in my role as director of NITG after the merger was approved does not render me interested at the time of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 419. 479.

Defendant states that Plaintiffs' sole basis for this allegation is that he remains on

NITG's board. Defendant further states that after more than two years of discovery, PlaintifIs have no evidence that I was induced to approve the merger. Defendant further incorporates his response to Paragraphs 290-297 which show that I did not approve the merger in exchange for a board position and that, under Delaware law, fees earned in my role as director of NITG after the merger was approved does not render him interested at the time of the merger. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 420.

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480.

Defendant states that the allegation "RSM Undervalues SCI" preceding Paragraph

421 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 481.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 421. 482.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 422. 483.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5 and that document speaks for itself. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 423. 484.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Fails to Apply Control Premium to SCI" preceding Paragraph 424. 485.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 424. 486.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent

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with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 425. 487.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 426. 488.

Defendant admits that FITG, like all businesses, faced risks and that those risks

were thoroughly disclosed in the Prospectus for the merger. Defendant further admits that SCI faced great issues and risks before the merger.

Except as expressly admitted and stated,

Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 427. 489.

Defendant denies the allegations in Paragraph 428.

490.

Defendant admits that SCI's minority shareholders were not entitled to a "control

premium" as part of the merger as they did not have control of SCI. Defendant further admits that Fund III purchased its controlling interest in SCI for $12.30 per share when SCI's asked for price on the OTCBB was $15.00 per share, essentially receiving a "control discount." Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 429. 491.

Defendant states that the allegation "RSM Overvalues FITG" preceding

Paragraph 430 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 492.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent

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with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 430. 493.

Defendant admits that Trenwith Valuation, LLC ("Trenwith") valued FITG as of

July 2005 for management equity plan purposes and between them and the merger circumstances changed to increase FITG's value compared to what was calculated by Trenwith, including that FITG acquired additional businesses, including the remaining 50% of Parras Cone, so that FITG was a larger business in 2006 than it was in 2005. Defendant further admits that Plaintiffs purport to paraphrase and quote from Choy Depo. Ex. 16, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 431. 494.

Defendant admits that FITG management made RSM aware of the Trenwith

valuation and provided it to both special committees as part of the due diligence process. Defendant further incorporates the response to Paragraph 431 as though fully set forth herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 432. 495.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 433. 496.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Used Different Metrics for FITG than for SCI" preceding Paragraph 434. 497.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent

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with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 434. 498.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 435. 499.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 436. 500.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 437. 501.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Disregarded Negative Metrics for FITG" preceding Paragraph 438. 502.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 438. 503.

Defendant admits that FITG was going through a significant reorganization in

2006 that included rationalizing domestic plants and building international Greenfield projects. Defendant further admits that this plan was designed to lower FITG's costs, move it closer to its existing customers, and to expand into new international markets. Defendant further admits that

- 116 ATl-2491514vl


this quasi-start-up period was fully disclosed before the merger and that FITG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing. Defendant further admits that FITG disclosed that the merger would be accretive to FITG shareholders on a standalone basis for 2006 to 2008. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 439. 504.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 440. 505.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Disregarded Execution Risks of FITG" preceding Paragraph 441. 506.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 441. 507.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Exs. 22 and 23, those document speaks for themselves, and Defendant denies any allegations inconsistent with them.

Except as expressly admitted and stated, Defendant is

without knowledge or information to form a belief as to the truth of the allegations in Paragraph 442. 508.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 443.

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509.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 444. 510.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 445. 511.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 446. 512.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Exs. 22 and 23, those document speaks for themselves, and Defendant denies any allegations inconsistent with them.

Except as expressly admitted and stated, Defendant is

without knowledge or information to form a belief as to the truth of the allegations in Paragraph 447. 513.

Defendant admits that the risks associated with FITG's plan to rationalize

domestic assets and build international Greenfield projects were patent and disclosed during due diligence and in the Prospectus before the merger.

Defendant further admits that Mr. Ross

testified: Q Did you have any -- did you have any conversations or communications with Mr. Tessoni regarding your belief that ITG faced tremendous execution risk? A I think anybody who looked at lTG, and looked at the financial forecasts, would know that. They were phasing down several operations in the United States, starting up things in several different countries and planning to make a series of acquisitions. Anybody who can read and write would know there was tremendous execution risk. Q Did you do anything to confirm that Mr. Tessoni and RSM understood the execution risk that ITG faced?

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A Again, I think it was obvious to anyone, number one, and number two, I was rebuffed in my efforts to even know what the McGladrey firm was doing because of the counsel for the special committee. So I did not introduce anything to them for fear they would claim I was interfering. (Ross Depo. at 598-99.) Except as expressly admitted and stated, Defendant is without knowledge or ir.formation to form a belief as to the truth of the allegations in Paragraph 448. 514.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 449. 515.

Defendant admits that Plaintiffs purport to paraphrase and quote from Choy

Depo. at 306-07, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it.

Defendant further states that the cited testimony does not support the

allegation that RSM did not consider the effect if FITG did not achieve its projected sales and profits. Defendant further states that the cited testimony is nothing more than Plaintiffs' counsel claiming a proposition without providing any record evidence or getting Mr. Choy to agree with the stated proposition. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 450. 516.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 451. 517.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Disregarded Planned Dilution of FITG" preceding Paragraph 452. 518.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 452. 519.

Defendant admits that FITG's Strategic Plan included assumptions concerning

debt and equity to support FITG's Greenfield projects and other business needs, and that the

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actual capital needs were later modified and reduced in 2007. Defendant further admits that after the merger Fund II converted approximately $68 million in debt to preferred equity, and that Fund 1II contributed additional equity to NITG.

Except as expressly admitted and stated,

Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 453. 520.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 454. 521.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Disregarded FITG's Under-Funded Pension Liability" preceding Paragraph 455 522.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 455. 523.

Defendant admits that the underfunded pension liability was included in FITG's

Strategic Plan and was disclosed to the advisors for the special committees. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 456. 524.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 457. 525.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Failed to Assess FITG's Off-Balance Sheet Assets" preceding Paragraph 458.

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526.

Defendant admits that a breakdown of FITG's off-balance sheet assets and the

accompanying appraisals of those assets were provided to the advisors of the special committees during the diligence process. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 458. 527.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Defendant further states that the agreed upon exchange ratio effectively discounted FITG's off balance sheet assets by 70%. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 459. 528.

Defendant denies the allegations in Paragraph 460.

529.

Defendant denies the allegations in Paragraph 461.

530.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

at 306-07, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it.. Defendant further admits that Mr. Wax testified: A. I think in my prior testimony when I outlined either five or six methodologies of which half the value is one, I said that there were preferred methodologies that focused more on earnings for the company. But that if you didn't have access to those methodologies or the information to undertake that analysis, that you could use book value. (Wax Depo at 668.)

Defendant further admits that FITG's off balance sheets assets included operating facilities, equipment, and inventory and provided value to the combined company on a going concern basis. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 462. 531.

Defendant denies the allegations in Paragraph 463.

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532.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Used FITG Projections That Included Unapproved or Uncertain Projects" preceding Paragraph 464. 533.

Defendant admits that FITG provided its Strategic Plan to the advisors for the

special committees during due diligence.

Defendant further incorporates his responses to

Paragraphs 303-309 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 464. 534.

On information and belief as to these matters, Defendant admits that the Strategic

Plan was FITG's management's best good faith belief and projection of FITG's future business outlook.

Defendant further admits that this Strategic Plan included certain synergistic

acquisitions that management believed were very likely and had been previously disclosed to and discussed with the financial advisors for the special committees. Defendant further admits that Mr. Ross testified that including potential acquisitions in a strategic plan is not unusual. (Ross Dep. at 259-61.)

Defendant further admits that SCI's projections provided to the special

committees' advisors also contained business that had neither been obtained nor contractualized. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 465. 535.

On information and belief as to these matters, Defendant admits that FITG was

targeting an acquisition of certain assets of Delta Woodside ("Delta"), a cotton mill and textile manufacturer, that would have strong synergies with FITG. Defendant further admits that Delta was on the verge of bankruptcy and that FITG had been targeting Delta's most valuable assets since 2005 and had undergone several rounds of negotiations and bids with Delta's management

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and credit holders. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 466. 536.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

Exs. 463 and 465, those document speak for themselves, and Defendant denies any allegations inconsistent with them. On information and belief as to these matters, Defendant further admits that FITG management believed that the acquisition of Delta was very likely: (l) On August 8, 2006, Mr. Gorga email Mr. Wax and advised him that Delta's Board was favoring FITG's earlier offer; (2) on September 1,2006, Delta filed an 8-K that did not name FITG, but discussed it as a "potential acquirer"; (3) on September 22 and October 5, FITG made revised offers to acquire Delta; and (4) on October 11, 2006, Mr. Gorga emailed Mr. Ross that he was "cautiously optimistic" about Delta accepting FITG's offer.

Defendant further admits that Mr. Gorga

testified about Wax Depo. Ex. 463, which is contained within Gorga Depo. Ex. 220, and rejected Plaintiffs' interpretation: Q. And when you talk here about determining whether the acquisition of Delta is a real possibility, what did that mean? A. You know, August 17, I mean, we were - I was telling the board that we were going to continue to press. We felt like strategically this was the right direction for us to go in. And in my interactions with the advisor and with the CEO of Delta Woodside plant, you know, I was feeling pretty confident this was going to be part ofITG. (Gorga Depo. at 227 [emphasis added].) Defendant fmiher admits that FITG was so confident in acquiring Delta's assets that it purchased equipment from Gibbs International in reliance on acquiring Delta. (Gorga Depo. at 297-98; Smith Depo. at 191.) Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 467.

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537.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gibbons

Depo. Ex. 569, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further incorporates his response to Paragraph 467 as though full incorporated herein. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 468. 538.

On information and belief as to these matters, Defendant admits that Bank Model

referenced in Wax Ex. 428 was not intended to be, and never was, FITG's strategic plan. Defendant further admits that the Bank Model was different from the Strategic Plan in content and purpose, and that the Bank Model had lower projected earnings with less debt whereas the Strategic Plan had higher projected earnings with greater debt. Defendant further admits that Plaintiffs purport to paraphrase and quote from Wax Depo. Ex. 428, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 469. 539.

On information and belief as to these matters, Defendant admits that Bank Model

referenced in Wax Ex. 428 was not intended to be, and never was, FITG's strategic plan. Defendant further admits that the Bank Model was different from the Strategic Plan in content and purpose, and that the Bank Model had lower projected earnings with less debt whereas the Strategic Plan had higher projected earnings with greater debt. Defendant further states that Plaintiffs purport to paraphrase and quote from Spradling Depo. Ex. 338 (the Bank Model), that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 470. 540.

On information and belief as to these matters, Defendant states that, as a general

proposition, changing inputs for a model will change the results projected by that model, and that

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the Bank Model was different from the Strategic Plan in content and purpose.

Except as

expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 471. 541.

On information and belief as to these matters, Defendant states that, as a general

proposition, changing inputs for a model will change the results projected by that model, and that the Bank Model was different from the Strategic Plan in content and purpose.

Except as

expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 472. 542.

On information and belief as to these matters, Defendant states that, as a general

proposition, changing inputs for a model will change the results projected by that model, and that the Bank Model was different from the Strategic Plan in content and purpose.

Except as

expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 473. 543.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 474. 544.

On information and belief as to these matters, Defendant admits that RSM had

one several hours long in person meeting with FITG management, and many follow up communications via telephone and email.

Defendant further admits that the Strategic Plan

included certain synergistic acquisitions, including the acquisition of Delta, that management believed were likely and those potential acquisitions were disclosed to and discussed with the financial advisors for the special committees. (Choy Depo at 693-94; 753-767.) Defendant further admits that FITG management expected the special committee advisors to test FITG's projections, run sensitivity analyses, and reach their own independent conclusions. Defendant

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further incorporates his response to Paragraph 467 as though full incorporated herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 475. 545.

Defendant incorporates his responses to Paragraphs 467 and 475 as though full

incorporated herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 476. 546.

Defendant incorporates his responses to Paragraphs 467 and 475 as though full

incorporated herein. Defendant further admits that Plaintiffs purport to paraphrase and quote from Wax Depo. at 354, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 477. 547.

Defendant incorporates his responses to Paragraphs 467 and 475 which show that

the advisors to the special committees were told about Delta's impact on FITG's Strategic Plan, that including an acquisition in a strategic plan is not unusual, and that SCI's projections also included business that was neither agreed to nor contractualized. Except as expressly admitted and stated, Defendant denies any remaining allegations in Paragraph 478. 548.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Failed to Recommend or Conduct a Market Test" preceding Paragraph 479. 549.

Defendant admits that (l) SCI could not be sold after two years of aggressive

marketing, (2) SCI's controlling interest was sold at a discounted market rate to distressed investors, (3) the SCI special committee did not have the power to shop the entire company three months after its controlling interest was purchased by Fund III, and (4) the minority shareholders

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were free to sell their stock at anytime on the open market if they disagreed with the exchange ratio. Defendant further admits that during the merger SCI was valued at a higher price than what Fund III paid, and that an unaffiliated third party would have valued SCI at an even lower level than Fund Ill's purchase price in a "market test" situation since SCI's earnings had eroded by approximately 70% in the time between Fund Ill's purchase and the merger. Defendant further admits that undertaking a costly, time consuming, and pointless market test to reaffirm the market's disinterest in purchasing SCI was unnecessary for the SCI Board to fulfill its fiduciary duties in light of the SCI Board's inability to sell the company in the two years before the merger.

Except as expressly admitted and stated, Defendant is without knowledge or

information to form a belief as to the truth of the allegations in Paragraph 479. 550.

Defendant admits that Plaintiffs purport to paraphrase and quote from Choy Depo.

Ex. 70, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 480. 551.

Defendant incorporates his responses to Paragraphs 298-302 and 479 showing

that additional marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 481. 552.

Defendant incorporates his responses to Paragraphs 298-302 and 479 showing

that additional marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 482.

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553.

Defendant incorporates his responses to Paragraphs 298-302 and 479 showing

that additional marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Defendant further states that this allegation also states a legal conclusion which is not subject to and admission or denial, but to the extent a response is possible, Defendant denies that the SCI Board has any duties under Revlon, Inc. v. jifacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986), which is inapplicable. Except as expressly

admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 483. 554.

Defendant is without knowledge or information to form a belief as to the truth of

the allegation "RSM Improperly Determined FITG's Value From Discounted Cash Flow Analysis" preceding Paragraph 484. 555.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraphs 484A-C. 556.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraphs 485A. 557.

Defendant admits that the risks associated with FITG's plan to rationalize

domestic assets and build international Greenfield projects were patent and disclosed during due diligence and in the Prospectus before the merger.

Defendant further admits that Mr. Ross

testified that the risks of FITG's business plan were clear. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraphs 485B.

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558.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

at 514, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Wax testified that "effectively I might have gotten to the same place because there's no question that there should be an increased risk premium for ITG at that level, at that stage in its development," and that he also clarified that: In discussing how they got to it and how I might get to it, I said I might have gotten to the same number. You know, I can't tell you, you know, what number I would have gotten to four years ago. I acknowledge that there's significant execution risk. I don't know if I would have gotten to the same number or not. The way they got to the that number I've already critiqued. I don't know what else I can tell you. (Wax Depo. at 516 [emphasis added].) Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraphs 485C. 559.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 485D. 560.

On information and belief as to these matters, Defendant incorporates his

responses to Paragraphs 464-478 which show that the advisors to the special committees were told about Delta's impact on FITG's Strategic Plan, that including an acquisition in a strategic plan is not unusual, and that SCI's projections also included business that was neither agreed to nor contractualized.

Defendant further admits that FITG management expected the special

committee advisors to test FITG's projections, run sensitivity analyses, and reach their own independent conclusions.

Except as expressly admitted and stated, Defendant is without

knowledge or information to form a belief as to the truth of the allegations in Paragraph 485E.

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561.

Defendant states that the allegation "The SCI Special Committee's Approval of

the Merger" preceding Paragraph 486 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 562.

Defendant admits that RSM found that the exchange ratio resulting in a 65/35

split of the combined company's stock was fair to the minority stockholders of SCI from a financial point of view on or about August 28, 2006. (Prospectus Annex C.) Defendant further admits that Plaintiffs purport to paraphrase and quote from Tessoni Depo. Exs. 22 and 23, those document speaks for themselves, and Defendant denies any allegations inconsistent with them. Defendant further admits that Tessoni Depo. Exs. 22 and 23 were negotiating scripts used by the SCI special committee and its advisors in negotiating the exchange ratio and took the most extreme position possible to advocate on behalf of SCI. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 486. 563.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 487. 564.

Defendant admits that RSM found that the exchange ratio resulting in a 65/35

split of the combined company's stock was fair to the minority stockholders of SCI from a financial point of view on or about August 28,2006. (Prospectus Annex C.) Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 488.

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565.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. Ex. 5, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 489. 566.

Defendant admits that Plaintiffs purport to paraphrase and quote from Choy Depo.

Ex. 70, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 490. 567.

Defendant admits that the SCI special committee recommended to the SCI Board

to approve the merger using an exchange ratio that resulted in FITG stockholders receiving 65% of the combined company's stock, and SCI stockholders receiving 35% of the combined company's stock. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 491. 568.

Defendant admits that Article Sixth of SCI's Charter contained anti-takeover

provisions that harmed SCI's value, made it more difficult to restructure, and shifted power over transactions from directors and officers with fiduciary duties to minority shareholders who owed no fiduciary duties. Defendant further admits that minority shareholders who disagreed with the changes to SCI's charter were free to sell their shares in SCI before and after the merger. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 492. 569.

Defendant admits that Plaintiffs purport to paraphrase and quote from an August

26, 2006 email from Mr. Ross to Mr. Wax (FURSA 758291), that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Article

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Sixth of SCI's Charter contained anti-takeover provisions that harmed SCI's value, made it more difficult to restructure, and shifted power over transactions from directors and officers with fiduciary duties to minority shareholders who owed no fiduciary duties. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 493. 570.

Defendant states that the allegation "SCI Board's Approval of the Merger"

preceding Paragraph 494 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 571.

Defendant admits that on August 29,2006, the SCI Board unanimously approved

the merger in reliance on the recommendation of the SCI special committee. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 494. 572.

Defendant admits that Mr. Ross asked the SCI special committee's counsel for the

RSM presentation and that request was refused.

(Ross Depo. at 231-33; 450-52; 598-600.)

Defendant further admits that he presented the findings and conclusions of the SCI special committee to the SCI Board before it voted to approve the merger. Except as expressly admitted and stated, Defendant denies the allegation "The Board Approved the Merger Without Analyzing the RSM Presentation" preceding Paragraph 495. 573.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

Ex. 451, which is the same as Ross Depo. Ex. 728, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 495. 574.

On information and belief as to these matters, Defendant admits that counsel for

FITG's special committee agreed that the FITG Board was permitted to see SunTrust's presentation to the FITG special committee.

Defendant admits that Plaintiffs purport to

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paraphrase and quote from Wax Depo. Ex. 450, which is the same as Ross Depo. Ex. 728, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 496. 575.

Defendant admits that Mr. Ross asked the SCI special committee's counsel for the

RSM presentation and that request was refused.

Defendant further admits that Mr. Ross

testified: A. Well, I thought it [RSM presentation] would be useful, since we do have some experience with financial advisors' reports, to look at it, and be sure that I agreed with it. But the counsel said no, so there was not very much we could do about it.

Q Did you ask to do more about it? Did you say, well, I have got to have it before I can vote on the transaction? A No. I had asked for it. Company counsel said it was inappropriate. Being the adverse party in the merger, in some regards, the last thing I wanted to do was to try to get the company counsel overruled. (Ross Depo. at 232; emphasis added.) Defendant further admits that Mr. Ross did not want to interfere with the SCI special committee's decisions or try to force it to tum over the RSM presentation: A I don't think it was our role to try to interfere with the special committee. We were an interested party. Anything we would propose by way of changing his process would surely end up being in litigation as interference.

Q At the point where he is reporting their conclusion and Dr. Tessoni is reporting their conclusion, did you have a duty in your mind to make sure that their conclusion was fair and reasonable? A We tried to get access to the work papers, which is what would have led us to make an independent evaluation of them. And counsel for the special committee, as you are aware, said that that was inappropriate.

Q Well, is it your belief that that ended your duty, your fiduciary duty?

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A Well, other than going to court to try to force them to turn it over, I don't know what practical solution there was.

Q Well, were you obligated to vote in favor of the merger? A I felt that the merger, as I have said before, was roughly in line with my own back-of-the-envelope thinking as someone who is very familiar with both companies. So I didn't see anything untoward in the opinion that would cause me any alarm. (Ross Depo at 451-52; emphasis added.)

Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 497. 576.

Defendant admits that he presented the findings and conclusions of the SCI

special committee to the SCI Board before it voted to approve the merger. Defendant further admits that on August 29,2006, the SCI Board unanimously approved the merger in reliance on the recommendation of the SCI special committee. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 498. 577.

Defendant hereby responds to the allegations in Paragraph 499 by incorporating

their responses to Paragraphs 181-190 as though fully set forth herein. 578.

Defendant denies the allegation "The Board Approved the Merger Even Though

the Consideration to FITG was Far in Excess of Other Valuations of FITG" preceding Paragraph 500. 579.

Defendant admits that the merger was a stock-for-stock transaction and no cash

was exchanged between SCI and FITG. Defendant further admits that SCI could not issue stock for more value than SCI was worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 500.

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580.

On information and belief as to these matters, Defendant admits that Trenwith

valued FITG as of July 2005 for management equity plan purposes and between them and the merger circumstances changed to increase FITG's value compared to what was calculated by Trenwith, including that FITG acquired additional businesses, including the remaining 50% of Parras Cone, so that FITG was a larger business in 2006 than it was in 2005. Defendant further incorporates his responses to Paragraphs 160-161 and 500 as though fully set forth herein. Defendant further admits that Plaintiffs purport to paraphrase and quote from Choy Depo. Ex. 16, that document speaks for itself: and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 501. 581.

Defendant admits that after June 2005, FITG acquired additional businesses,

including the remaining 50% of Parras Cone, so that FITG was a larger business in 2006 than it was in 2005. Defendant further admits that Plaintiffs purport to paraphrase and quote from NixonPeabody 0000236; FURSA-653141; and the Prospectus, and those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Defendant further incorporates his response to Paragraph 500 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 502. 582.

Defendant further admits that Plaintiffs purport to paraphrase and quote from

FURSA-696593, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further incorporates his response to Paragraph 500 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 503.

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583.

Defendant further admits that Plaintiffs purport to paraphrase and quote from an

August 23, 2006 email between Pam Wilson and Mr. Ross (FURSA 653141), that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Fund II's and Fund Ill's internal valuations of FITG and SCI were approximately within the same ratio as, and consistent with, the merger exchange ratio. Defendant further admits that Mr. Ross testified: A. But it's not -- it's not that surprising that two advisors would come with somewhat different absolute numbers. The real question in a merger for shares is the relative value of the two entities, because cash is not changing hands, it's only shares. And it turned out that they [financial advisors] had essentially the same view as fairness of the share exchange ratio, and to me that was the relevant topic. (Ross Depo. at 453; emphasis

added.) Defendant further incorporates his response to Paragraph 500 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 504. 584.

Defendant admits that Plaintiffs purport to paraphrase and quote from an August

27, 2006 email between Mr. Ross and Mr. Wax (FURSA 235211), that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Wax responded to this email and informed Mr. Ross that he "misread the write-up" and that his numbers were incorrect. (FURSA 652710.) Defendant further incorporates his response to Paragraph 500 as though fully set forth herein.

Except as expressly admitted and stated,

Defendant denies the remaining allegations in Paragraph 505. 585.

Defendant denies the allegation "The Board Approved the Merger Even Though

the SunTrust Valuation (Which Had Been Provided to Ross and Gorga) Showed that FITG was not Worth Anything Close to the Merger Consideration" preceding Paragraph 506.

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586.

Defendant admits that the merger was a stock-for-stock transaction and no cash

was exchanged between SCI and FITG. Defendant further admits that SCI could not issue stock for more value than SCI was worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni Depo. Ex. 7, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 506. 587.

Defendant states that the allegations in Paragraph 507 state a legal conclusion that

is not subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 507. 588.

Defendant admits that Plaintiffs purport to paraphrase and quote from Ross Depo.

Ex. 729, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Ross testified that SunTrust's conclusions about the merger exchange ratio was consistent with his thinking and did not see anything untoward about SunTrust's conclusions or the merger. (Ross Depo. at 235.) Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 508. 589.

Defendant admits that Plaintiffs purport to paraphrase and quote from Ross Depo.

Exs. 729 and 730, those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Defendant further incorporates his response to Paragraph 508 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 509. 590.

Defendant admits that Plaintiffs purport to paraphrase and quote trom the

depositions of Messrs. Ross, Gorga, and Wax, their testimony speaks for itself, and Defendant

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denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 510. 591.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, which is a duplicate of Ross Depo. Ex. 730, that document speaks for itself, and Defendant denies any allegations inconsistent with it.. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 512. 592.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, which is a duplicate of Ross Depo. Ex. 730, and Ross Depo. Ex. 735, that those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Defendant further states that SunTrust found FITG's value ranged between $80-$235.8 million. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 512. 593.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, which is a duplicate of Ross Depo. Ex. 730, Ross Depo. Ex. 735, and the Trenwith valuation, that those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Detendant further states that SunTrust found FITG's value ranged between $80-$235.8 million. Defendant further states that Trenwith's valuation of FITG was for management equity plan purposes, not a merger, and it does not stand for the proposition alleged. Defendant further states that a net asset value is not the same as "forced liquidation value" and the allegations include terms that are not present in the cited documents. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 513.

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594.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, which is a duplicate of Ross Depo. Ex. 730, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that Mr. Wax testified that asset valuation is another way of looking at book value, but the two terms are not identical. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 514. 595.

Defendant admits that Plaintiffs purport to paraphrase and quote from Wax Depo.

at 234-35, that testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further admits that asset value can be an important metric under the correct circumstances: I think in my prior testimony when I outlined either five or six methodologies of which halfthe value is one, I said that there were preferred methodologies that focused more on earnings for the company. But that if you didn't have access to those methodologies or the information to undertake that analysis, that you could use book value. (Wax Depo. at 668.) Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 515. 596.

Defendant admits that Plaintiffs purport to paraphrase and quote from a SunTrust

spreadsheet (STRH_for ITG_0000821.xls), that document speaks for itself, and Defendant denies any allegations inconsistent with it. Defendant further states that this SunTrust document found FITG's value, even when excluding FITG's net asset value, ranged between $58.1-$206.5 million.

Except as expressly admitted and stated, Defendant is without knowledge or

information to form a belief as to the truth of the allegations in Paragraph 516. 597.

Defendant admits that SCI could not issue stock for more value than SCI was

worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount.

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Except as expressly admitted and stated, Defendant denies the remaining allegations

III

Paragraph 517. 598.

Defendant denies the allegations in Paragraph 518.

599.

Defendant admits that Plaintiffs purport to paraphrase and quote from Gorga

Depo. Ex. 263, which is a duplicate of Ross Depo. Ex. 730, and Ross Depo. Ex. 735, that those document speaks for themselves, and Defendant denies any allegations inconsistent with them. Defendant further states that SunTrust found FITG's value ranged between $80-$235.8 million. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 519. 600.

Defendant states that SunTrust found FITG's value ranged between $80-$235.8

million, which was greater than the value SunTrust found for SCI. Defendant further admits that SCI could not issue stock for more value than SCI was worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 520. 601.

Defendant admits that SCI could not issue stock for more value than SCI was

worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Defendant further incorporates his response to Paragraph 142 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 521. 602.

Defendant states that SunTrust found FITG's value ranged between $80-$235.8

million, which was greater than the value SunTrust found for SCI. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 522.

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603.

Defendant admits that FITG was paying its debts as they came due, was never

issued a going concern opinion by its independent auditor, was never in the zone of bankruptcy, and never filed for bankruptcy. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 523. 604.

Defendant incorporates his responses to Paragraphs 199-200 which show that the

performance and value of FITG, SCI, and/or NITG played no role in the sale of WLR to Invesco and that WLR has raised billions of dollars while NITG's asked for price on the OTCBB has declines. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 524. 605.

Defendant admits the allegation "The Merger Closed on October 20, 2006"

preceding Paragraph 525. 606.

Defendant admits that Mr. Duerk was directed by the SCI Board to execute the

merger agreement and other related documents. Defendant further admits that no interested officers or directors, like Mr. Duerk, performed merger related due diligence and that all diligence related to the merger was delegated by the FITG and SCI boards to their respective special committees and advisors. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 525. 607.

Defendant admits that Plaintiffs purport to paraphrase and quote from the

Prospectus and Merger Agreement, those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Defendant further states that the allegations in Paragraph 526 state a legal conclusion that is not subject to admission or denial. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 526.

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608.

Defendant admits that Plaintiffs purport to paraphrase and quote from the Duerk

Depo. Ex. 34 and 36 and NITG's October 26, 2006 8-K, those documents speak for themselves, and Defendant denies any allegations inconsistent with them. Defendant further admits that Wachovia Bank consented to amend its credit facility with SCIon or about October 11,2006 to waive a provision that precluded SCI from merging with any company without Wachovia Bank's consent. (10/26/06 NITG 8-K & Ex. 10.1 thereto.) Defendant further admits that SCI's existing credit facility was due to expire on October 8, 2006 and that as of October 6, 2006, Wachovia Bank and SCI agreed to extend the maturity date. (10/10/06 SCI 8-K.) Defendant further states that Wachovia Bank's delay in consenting to the merger concerned its belief that a replacement credit facility would be in place for the combined company before the existing credit facility expired so that a consent would not be necessary. (Duerk Depo. Ex. 34.) Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 527. 609.

Defendant admits that Wachovia Bank consented to the merger and that the

merger closed on October 20, 2006. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 528. 610.

Defendant admits that FITG was merged with a subsidiary of SCI, SCI was

renamed International Textile Group, Inc., and the combined company's corporate headquarters was relocated to Greensboro, NC. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 529. 611.

Defendant denies the allegation "The Value of SCI (Now NITG) has Collapsed

Because of the Merger" preceding Paragraph 530.

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612.

Defendant admits that the asked for bid price for NITG on the date the merger

closed was $13.25 per share and that the average asked for bid price for NITG for the remainder of 2006 was $13.15 per share. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 530. 613.

Defendant admits that on the day the merger was announced, August 30, 2006,

the asked for bid price for SCI was $14.65 per share and 1000 shares were traded that date at that pnce. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 531. 614.

Defendant admits that on the day the merger was announced, August 30, 2006,

the asked for bid price for SCI was $14.65 per share, 1000 shares were traded that date at that price, and this transaction yielded a gross return of $14,650. Defendant further admits that SCI's stock traded precisely ten times between August 30 and October 20, 2006 with an average volume of 3750 shares per trade.

Defendant further admits that in the time between the

announcement of the merger and its close, no one traded SCI's stock on 27 of the 37 available trading days. Defendant further states that at least since SCI began marketing itself for sale in 2004, no one was interested in purchasing all of SCI's shares (5,507,147 shares in total), and that the largest volume purchase during that sales effort was when Fund III purchased a controlling interest in SCI for a $2.70 per share discount from the then asked for market price. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 532. 615.

Defendant admits that Plaintiffs purport to paraphrase and quote from RSM's

presentation to the SCI special committee, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 533.

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616.

Defendant incorporates his responses to Paragraph 532-533 as though fully set

forth herein.

Except as expressly admitted and stated, Defendant denies the allegations in

Paragraph 534. 617.

Defendant admits that SCI could not issue stock for more value than SCI was

worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Defendant further admits that NITG's market cap on the day after the merger was more than $230 million.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 535. 618.

Defendant admits that NITG's stock price dropped over a long period of time and

that drop had nothing to do with the merger. Defendant incorporates his response to Paragraph 532 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 536. 619.

Defendant states that Bear Stearns & Co. collapsed in March 2008. Defendant

further admits that on or about April 2, 2006 the asked for bid price for NITG was $1.65 per share and approximately 1200 shares traded at the price. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 537. 620. forth herein.

Defendant hereby incorporates his responses to Paragraphs 5-9 as though fully set Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 538. 621.

Defendant denies the allegation "Further Negative Consequences of the Merger"

preceding Paragraph 539. 622.

Defendant denies the allegations in Paragraph 539.

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623.

Defendant states that the allegation "New Credit Facility" preceding Paragraph

540 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 624.

Defendant admits that SCI's existing credit facility was due to expire on October

8, 2006 and that as of October 6, 2006, Wachovia Bank and SCI agreed to extend the maturity date so SCI could obtain a larger replacement credit facility for the combined company. (10/10/06 SCI 8-K.) Defendant further states that the credit facilities of the pre-merger entities were insufficient for the needs of the combined entity and NITG entered into a new credit facility in December 2006, which was announced in January 2007. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 540. 625.

Defendant states that SCI's credit facility was not comparable to NITG's credit

facility as SCI's credit facility supported a much smaller entity that did not effectively use its debt, made virtually no investment in capital expenditures, and avoided incurring debt to enhance efforts to sell SCI. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 541. 626.

Defendant admits that Funds affiliated with WLR invested equity in NITG after

the merger to provide enough capital for the international Greenfield projects. Defendant further admits that Funds affiliated with WLR capitalized NITG with approximately $140 million in post-merger equity. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 542. 627.

Defendant admits that NITG formed an independent special committee to review,

analyze, negotiate, and, if appropriate, approve the creation of preferred shares in NITG and certain related transactions. Defendant further states that the approval of the merger of SCI and

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FITG had nothing to do with the issuance of preferred shares, and that the preferred shares transactions were approved by a different special committee and board and concerned different issues. Defendant further states that providing capital to a corporation must be in the form of either debt or equity, and equity contributions require the issuance of stock. Defendant further admits that the preferred shares in NITG had various terms, including a conversion option and cumulative dividend that could be paid with shares at NITG's discretion so as not to negatively impact its cash flow. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 543. 628. herein.

Defendant incorporates his response to Paragraph 543 as though fully set forth

Except as expressly admitted and stated, Defendant denies the remaining allegations in

Paragraph 544. 629.

Defendant incorporates his response to Paragraph 543 as though fully set forth

herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 545. 630.

Defendant incorporates his responses to Paragraphs 540-543 which show that

NITG's credit facility was far superior to SCI's old, expiring facility, and that SCI's old facility was inadequate for the needs of the much larger combined company.

Except as expressly

admitted and stated, Defendant denies the remaining allegations in Paragraph 546. 631.

Defendant incorporates his responses to Paragraphs 540-543 which show that

NITG's credit facility was far superior to SCI's old, expiring facility, and that SCI's old facility was inadequate for the needs of the much larger combined company.

Except as expressly

admitted and stated, Defendant denies the remaining allegations in Paragraph 547.

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632.

On information and belief as to these matters, Defendant admits that the Bank

Model was updated several times during the closing period and presented to potential lenders as part of the process to obtain a credit facility for the combined company. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 548. 633.

Defendant states that the allegation "Debt for Equity Swap" preceding Paragraph

549 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 634.

Defendant admits that before the merger Fund II loaned FITG approximately

$56.2 million for its international Greenfield projects. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 549. 635.

Defendant admits that the $56.2 million Fund II loaned FITG before the merger

was made pursuant to unsecured notes with an interest rate of 4.78%.

Except as expressly

admitted and stated, Defendant denies the remaining allegations in Paragraph 550. 636.

Defendant admits that the $56.2 million Fund II loaned FITG was worth $56.2

million plus interest and was used by FITG to develop and build its international Greenfield projects. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 551. 637.

Defendant admits that SCI's and FITG's debts were not extinguished by the

merger and both companies brought their respective debts and other financial obligations to NITG. Defendant further admits that the $56.2 million debt owed by NITG to Fund II was transmuted to equity in 2007 and NITG has not had to repay that debt. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 552.

- 147 ATI-2491514vI


638.

Defendant admits that in March 2007, Fund II agreed that in lieu of cash payment

to satisfy the debt and interest owed on the notes by NITG, Fund II would accept preferred shares in the amount owed. Defendant further states that by converting this debt to equity, NITG was no longer required to pay back these debts and its cash flow improved. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 553. 639.

Defendant admits that the preferred shares in NITG had various terms, including a

conversion option at a certain stock price based on a specific formula set forth in the preferred stock certificate and cumulative dividend that could be paid with shares at NITG's discretion so as not to negatively impact its cash flow. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 554. 640.

Defendant admits that the preferred shares in NITG had various terms, including a

conversion option at a certain stock price based on a specific formula set forth in the preferred stock certificate and cumulative dividend that could be paid with shares at NITG's discretion so as not to negatively impact its cash flow. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 555. 641.

Defendant admits that the new credit facility and preferred shares transactions

benefited NITG. Defendant further states that the approval of the merger of SCI and FITG had nothing to do with the issuance of preferred shares. Defendant incorporates his responses to Paragraphs 540-543 which show that NITG's credit facility was far superior to SCI's old, expiring facility, and that SCI's old facility was inadequate for the needs of the much larger combined company. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 556. 642.

Defendant denies the allegations in Paragraph 557.

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643.

Defendant states that the allegation "Allegations as to Defendants' Knowledge"

preceding Paragraph 558 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 644.

Defendant admits that Messrs. Ross, Wax, Gorga, and Smith were aware of

FIIG's financial condition in 2006. Defendant further states that the remaining allegations in Paragraph 558 are so vague and over broad that Defendant is without knowledge or information to form a belief as to the truth of those allegations. 645.

On information and belief as to these matters, Defendant admits that Messrs.

Ross, Wax, Gorga, and Smith were aware of FIIG's financial condition in 2006 before the merger closed. Defendant further admits that Messrs. Storper, Gibbons, and Duerk were made aware of certain facts concerning FIIG's financial condition in 2006 before the merger closed. Defendant further admits that information concerning FIIG's financial information and business was disclosed to the public before the merger closed, and that FIIG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing.

Defendant further admits that Messrs. Ross, Wax, Gorga, Smith, Storper,

Gibbons, and Duerk were aware of NIIG's financial performance after the merger closed. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 559. 646.

On information and belief as to these matters, Defendant admits that Messrs.

Ross, Wax, Gorga, and Smith were aware of FITG's financial condition in 2006 before the merger closed. Defendant further admits that Messrs. Storper, Gibbons, and Duerk were made aware of certain facts concerning FIIG's financial condition in 2006 before the merger closed. Defendant further admits that information concerning FITG's finances and business was

- 149 ATI-2491514vl


disclosed to the public before the merger closed, and that FITG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 560. 647.

Defendant admits that FITG borrowed $20 million from Fund II on September 18,

2006 to fund FITG's international Greenfield projects, and that Messrs. Ross, Wax, Gorga, Smith, Storper, Gibbons, and Duerk were aware of these international Greenfield projects and their funding demands, and that the September and earlier loans were publicly disclosed along with the reasons for those loans. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 561. 648.

Defendant incorporates his response to Paragraph 561 as thought fully set forth

herein. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 562. 649.

Defendant incorporates his response to Paragraph 561 as thought fully set forth

herein. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 563. 650.

Defendant admits that information concernmg FITG's finances, borrowing

history, and business was disclosed to the public before the merger closed, and that FITG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing.

Defendant further admits that NITG's finances,

borrowing history, and business history was disclosed to the public at least on a quarterly basis

- 150ATI-2491514vl


after the merger closed.

Except as expressly admitted and stated, Defendant denies the

allegations in Paragraph 564. 651.

Defendant admits that Messrs. Ross, Wax, Gorga, Smith, Storper, Gibbons,

Tessoni, and Duerk were aware of NITG's selling of the mattress business after the merger closed. Defendant is without knowledge or information to form a belief as to the truth of the allegations as to RSM. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 565. 652.

Defendant denies the allegations in Paragraph 566.

653.

On information and belief as to these matters, Defendant admits that Messrs.

Ross, Wax, Gorga, and Smith were aware of FITG's financial condition in 2006 before the merger closed. Defendant further admits that Messrs. Storper, Gibbons, and Duerk were made aware of certain facts concerning FITG's financial condition in 2006 before the merger closed. Defendant further admits that information concerning FITG's finances and business was disclosed to the public before the merger closed, and that FITG could operate at a loss to preserve market share and technical capabilities until the Greenfield projects were completed and began producing.

Defendant further admits that Messrs. Ross, Wax, Gorga, Smith, Storper,

Gibbons, and Duerk were aware of NITG's financial performance after the merger closed. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 567. 654.

Defendant incorporates his response to Paragraph 567 as though fully set forth

herein. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 568. 655.

Defendant admits that SCI's existing credit facility was due to expire on October

8, 2006, would have had to have been renegotiated whether or not the merger was approved, and

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that these facts were publicly disclosed in SCI's SEC filings before the merger. Defendant further incorporates his responses to Paragraphs 540-543 which show that NITG's credit facility was far superior to SCI's old, expiring facility, and that SCI's old facility was inadequate for the needs of the much larger combined company.

Except as expressly admitted and stated,

Defendant denies the remaining allegations in Paragraph 569. 656.

Defendant admits that SCI's and FITG's debts were not extinguished by the

merger and both companies brought their respective debts and other financial obligations to NITG, and these facts were publicly disclosed. Defendant further admits that FITG did not borrow money from WLR, but from Fund II.

Except as expressly admitted and stated,

Defendant denies the remaining allegations in Paragraph 570. 657.

Defendant denies the allegations in Paragraph 571.

658.

The allegations in Paragraph 572 as to Dr. Tessoni are denied.

659.

The allegations in Paragraph 573 are denied.

660.

Defendant denies the allegations in Paragraph 574.

661.

Defendant denies the allegations in Paragraph 575.

662.

Defendant denies the allegations in Paragraph 576.

663.

Defendant denies the allegations in Paragraph 577.

664.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 578. 665.

Defendant denies the allegations in Paragraph 579.

666.

Defendant denies the allegations in Paragraph 580.

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667.

Defendant incorporates his response to Paragraph 580 as though fully set forth

herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 581. 668.

Defendant denies the allegations in Paragraph 582.

669.

Defendant denies the allegations in Paragraph 583.

670.

Defendant denies the allegations in Paragraph 584.

671.

Defendant denies the allegations in Paragraph 585.

672.

Defendant denies the allegations in Paragraph 586.

673.

Defendant admits that SCI's Board was aware of its special committee's authority

concerning the merger, and that the SCI special committee's scope of authority was publicly disclosed before the merger closed. Defendant further admits that, in response to a request from WLR to waive the standstill provision, the SCI special committee demanded that a new merger special committee be formed to "review, evaluate, investigate, negotiate, and approve the terms of any Potential Transaction." Defendant further incorporates his responses to Paragraphs 298302 which show that additional marketing of SCI would have been a costly and pointless endeavor in light of the preceding two year sales effort. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 587. 674.

Defendant denies the allegations in Paragraph 588.

675.

Defendant denies the allegations in Paragraph 589.

676.

Defendant denies the allegations in Paragraph 590.

677.

Defendant denies the allegations in Paragraph 591.

678.

Defendant admits that the merger benefited SCI more than FITG.

Except as

expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 592.

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679.

Defendant states that the allegation "Class Allegations" preceding Paragraph 593

is so vague that Defendant is without knowledge or infonnation to fonn a belief as to the truth of that allegation. 680.

Defendant states that the allegations in Paragraph 593 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 593. 681.

Defendant denies the remaining allegations in Paragraph 594.

682.

Defendant states that the allegations in Paragraphs 595A-CC state a legal

conclusion not subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 595A-CC. 683.

Defendant states that the allegations in Paragraphs 596A-I state a legal conclusion

not subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 596A-I. 684.

Defendant states that the allegations in Paragraphs 597 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 597. 685.

Defendant states that the allegations in Paragraphs 598 state a legal conclusion not

subject to admission or denial. To the extent a response is possible, Defendant denies the allegations in Paragraph 598. 686.

Defendant states that the allegations in Paragraphs 599 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 599.

- 154 ATI-2491514vI


687.

Defendant states that the allegation "Derivative and Demand Excused

Allegations" preceding Paragraph 600 is so vague that Defendant is without knowledge or information to form a belief as to the truth of that allegation. 688.

Defendant states that the allegations in Paragraphs 600 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 600. Defendant states that Mr. Menezes did not o\vn stock in SCI until July 2006, only

689.

purchasing shares after learning that the merger was pending. Defendant further admits that FURSA owned stock in SCI in 2006 and purchased additional shares after the merger was announced and after it closed. Except as expressly stated and admitted, Defendant is without knowledge or information to form a belief as to the truth of the remaining allegations in Paragraph 601. 690.

Defendant states that the allegations in Paragraphs 602 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 602. 691.

Defendant denies the allegations in Paragraph 603.

692.

Defendant admits the allegations in Paragraph 604.

693.

Defendant states that the allegations in Paragraphs 605 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 605. 694.

Defendant states that the allegations in Paragraphs 606 state a legal conclusion not

subject to admission or denial. To the extent a response is possible, Defendant admits that

- 155 ATI-2491514vI


Delaware law governs the internal affairs of NITG and that it is a Delaware corporation. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 606. 695.

Defendant states that the allegations in Paragraphs 607 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 607. 696.

Defendant states that the allegations in Paragraphs 608 state a legal conclusion not

subject to admission or denial. To the extent a response is possible, Defendant states that certain directors and officers of SCI and FITG were interested in the merger, but that these officers and directors were segregated from the transaction by the special committee structure used to negotiate and approve the merger on behalf of SCI and FITG. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 608. 697.

Defendant admits that Messrs. Ross, Gibbons, and Storper were "interested" SCI

directors for the merger because they had indirect financial interests in FITG and SCI through their investments in the general partners of Fund II, Recovery Associates II, Fund III, and Recovery Associates III.

Except as expressly admitted and stated, Defendant denies the

remaining allegations in Paragraph 609. 698.

Defendant admits that Mr. Gorga was an "interested" SCI director for the merger

because he held shares in FITG and had a financial interest in the merger. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 610. 699.

Defendant admits that Mr. Gorga was CEO of FITG, was CEO ofNITG after the

merger, and remains CEO of NITG today.

On information and belief as to these matters,

Defendant further states that if the merger had not been approved, Mr. Gorga would have remained CEO ofFITG. Defendant further states that at the time of the merger, SCI had no CEO

- 156 ATI-2491514vl


and was in desperate need of senior management. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 611. 700.

Defendant states that the allegations in Paragraphs 612 state a legal conclusion not

subject to admission or denial. Defendant further states that the unique process of two special committees negotiating and approving the terms and price of the merger segregated the controlling shareholder from the merger decision and requires the application of the business judgment rule.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 612. 701.

Defendant states that the allegations in Paragraphs 613 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 613. 702.

Defendant states that the allegations in Paragraphs 614 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 614. 703.

Defendant states that the allegations in Paragraphs 615 state a legal conclusion not

subject to admission or denial. Defendant further states that the unique process of two special committees negotiating and approving the terms and price of the merger segregated the controlling shareholder from the merger decision and requires the application of the business judgment rule.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 615. 704.

Defendant states that the allegations in Paragraphs 616 state a legal conclusion not

subject to admission or denial.

Defendant admits that the merger was a stock-for-stock

transaction and no cash was exchanged between SCI and FITG. Defendant further admits that

- 157 ATI-2491514vl


SCI could not issue stock for more value than SCI was worth, SCI was not worth $164-$167 million, and did not issue consideration in that amount. Defendant further states that SCI needed the merger with FITG for many reasons-including to obtain management, technical experience, and cost saving synergies-and approving the merger was an example of sound business judgment on the part of SCI's board. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 616. 705.

Defendant states that the allegations in Paragraphs 617 state a legal conclusion not

subject to admission or denial. Defendant further incorporates his response to Paragraph 616 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 617. 706.

Defendant states that the allegations in Paragraphs 618 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 618. 707.

Defendant admits the allegations in Paragraph 619.

708.

On information and belief as to these matters, Defendant admits that Messrs.

Ross, Gibbons, Wax, and Storper and Ms. Wilson are employees and/or officers of WLR. Defendant further admits that WLR is the management company for Funds II and III, and that Ms. Wilson is a Senior Vice President for WLR and has been since 2000. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 620. 709.

Defendant states that the allegations in Paragraphs 621 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 621.

- 158 ATI-2491514vl


710.

Defendant states that the allegations in Paragraphs 622 state a legal conclusion not

subject to admission or denial. Defendant further admits that any officer of NITG, like Mr. Gorga, could be considered an "affiliate ofWLR," but that does not make him unable to consider a demand that NITG sue WLR. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 622. 711.

Defendant states that the allegations in Paragraphs 623 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 623. 712.

Defendant states that no Defendant or employee of WLR has "profited" from the

merger (whatever Plaintiffs mean by that allegation), particularly Fund II and Fund III, which invested hundreds of millions of dollars in NITG, but has not earned a return from that investment. Defendant further states that no Defendant self-dealt in this transaction as the terms and exchange ratio for the merger were arrived at by independent special committees for FITG and SCI, not the controlling shareholder. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 624. 713.

Defendant admits that the merger was a stock-for-stock transaction and no cash

was exchanged between SCI and FITG. Defendant further admits that SCI could not issue stock for more value than SCI was worth, SCI was not worth $164-$167 million, and did not issue consideration in that amount. Defendant further incorporates his response to Paragraph 624 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 625. 714.

Defendant states that Mr. Gorga has not "profited" from the merger (whatever

Plaintiffs mean by that allegation), and further incorporate his response to Paragraph 624 as

- 159 ATI-2491514vl


though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 626. 715.

Defendant states that Mr. Boswroth has not "profited" from the merger (whatever

Plaintiffs mean by that allegation) , and further incorporate his response to Paragraph 624 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 627. 716.

Defendant states that the allegations in Paragraphs 628 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 628. 717.

Defendant states that the allegations in Paragraphs 629 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 629. 718.

Defendant states that Plaintiffs have made certain allegations against Messrs.

Ross, Gibbons, Storper, Gorga, and me, and that these allegations are without merit. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 630. 719.

Defendant states that the allegations in Paragraphs 631 state a legal conclusion not

subject to admission or denial. Defendant admits that he was the single member of the SCI special committee for the merger, and that special committee recommended the merger be approved. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 631. 720.

Defendant admits that Plaintiffs have made certain allegations against Mr. Wax

and that he is an employee of WLR. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 632.

- 160 ATl-2491514v[


721.

Defendant admits that Mr. Bosworth was the single member of the FITG special

committee for the merger and, in that role and as a director of FITG, was aware of FITG's financial condition in 2006. Defendant further states that despite Plaintiffs' intimations that Mr. Bosworth was somehow involved in the alleged wrongdoing, Mr. Bosworth has not been sued in this matter, the time for adding parties has lapsed, and Mr. Bosworth is not at risk of any liability with regard to the merger or the claims in this action. Defendant further states that Mr. Bosworth is independent and disinterested in this matter, and could have reviewed a demand to bring a derivative lawsuit on behalf ofNITG. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 633. 722.

Defendant admits that Ms. Wilson is an employee of WLR and in that role and as

a director of FITG she was aware of FITG's financial condition in 2006. Defendant further states that despite Plaintiffs' intimations that Ms. Wilson was somehow involved in the alleged wrongdoing, she has not been sued in this matter, the time for adding parties has lapsed, and she is not at risk of any liability with regard to the merger or the claims in this action. Defendant further states that Ms. Wilson could have reviewed a demand to bring a derivative lawsuit on behalf of NITG.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 634. 723.

Defendant states that the allegations in Paragraphs 635 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 635. 724.

In response to Paragraph 636, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 725.

Defendant admits the allegations in Paragraph 637.

- 161 ATI-2491514vl


726.

Defendant states that the allegations in Paragraphs 638 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 638. 727.

Defendant states that the allegations in Paragraphs 639 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 639. 728.

Defendant denies the allegations in Paragraph 640.

729.

Defendant denies the allegations in Paragraph 641.

730.

Defendant denies the allegations in Paragraph 642.

731.

In response to Paragraph 643, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 732.

Defendant states that the allegations in Paragraphs 644 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 644. 733.

Defendant states that the allegations in Paragraphs 645 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 645. 734.

Defendant denies the allegations in Paragraph 646.

735.

Defendant denies the allegations in Paragraph 647.

736.

Defendant denies the allegations in Paragraph 648.

737.

In response to Paragraph 649, Defendant incorporates the foregoing paragraphs as

if fully set forth herein.

- 162 ATl-2491514vI


738.

Defendant states that the allegations in Paragraphs 650 state a legal conclusion not

subject to admission or denial. 739.

Defendant admits that Mr. Wax was on FITG's Board and was involved in

FITG's business.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 651. 740. negotiations.

Defendant admits that Mr. Wax was familiar with the merger structure Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 652. 741.

Defendant states that the allegations in Paragraphs 653 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 653. 742.

Defendant denies the allegations in Paragraph 654.

743.

Defendant denies the allegations in Paragraph 655.

744.

Defendant admits the allegations in Paragraph 656.

745.

On information and belief as to these matters, Defendant admits that Mr. Smith

was familiar with the pre-merger investigation of SCI by FITG and with the merger structure negotiations.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 657. 746.

Defendant states that the allegations in Paragraphs 658 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 658. 747.

Defendant denies the allegations in Paragraph 659.

748.

Defendant denies the allegations in Paragraph 660.

- 163 ATI-2491514vl


749.

Defendant admits the allegations in Paragraph 661.

750.

Defendant admits that Plaintiffs purport to paraphrase and quote from the

Prospectus, that document speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 662. 751.

Defendant states that the allegations in Paragraphs 663 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 663. 752.

Defendant denies the allegations in Paragraph 664.

753.

Defendant admits that Mr. Ross was on the boards of SCI and FITG and was the

CEO of WLR. Defendant further admits that Mr. Ross was familiar with FITG's and SCI's businesses. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 665. 754. negotiations.

Defendant admits that Mr. Ross was familiar with the merger structure Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 666. 755.

Defendant denies the allegations in Paragraph 667.

756.

Defendant denies the allegations in Paragraph 668.

757.

Defendant denies the allegations in Paragraph 669.

758.

Defendant admits the allegations in Paragraph 670.

759.

Defendant admits that Mr. Gorga was familiar with the pre-merger investigation

of SCI by FITG and with the merger structure negotiations. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 671.

- 164 ATI-2491514vl


760.

Defendant states that the allegations in Paragraphs 672 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 672. 761.

Defendant denies the allegations in Paragraph 673.

762.

Defendant denies the allegations in Paragraph 674.

763.

Defendant admits that Mr. Storper was a director of SCI and an employee of

WLR. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 675. 764.

Defendant denies the allegations in Paragraph 676.

765.

Defendant states that the allegations in Paragraphs 677 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 677. 766.

Defendant denies the allegations in Paragraph 678.

767.

Defendant denies the allegations in Paragraph 679.

768.

Defendant admits that Mr. Gibbons was a director of SCI and an employee of

WLR. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 680. 769.

Defendant denies the allegations in Paragraph 681.

770.

Defendant states that the allegations in Paragraphs 682 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant denies the

allegations in Paragraph 683. 771.

Defendant denies the allegations in Paragraph 683.

772.

Defendant denies the allegations in Paragraph 684.

- 165 ATI-2491514vl


773.

Defendant denies the allegations in Paragraph 685.

774.

Defendant denies the allegations in Paragraph 686.

775.

In response to Paragraph 687, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 776.

Defendant denies the allegations in Paragraph 688.

777.

Defendant denies the allegations in Paragraph 689.

778.

Defendant denies the allegations in Paragraph 690.

779.

Defendant denies the allegations in Paragraph 691.

780.

Defendant denies the allegations in Paragraph 692.

781.

Defendant denies the allegations in Paragraph 693.

782.

In response to Paragraph 694, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 783.

Defendant denies the allegations in Paragraph 695.

784.

Defendant incorporates his response to Paragraph 532 as though fully set forth

herein. Except as expressly admitted and stated, Defendant denies the allegations in Paragraph 696. 785.

Defendant admits that SCI could not issue stock for more value than SCI was

worth, SCI was not worth $164-$166 million, and did not issue consideration in that amount. Defendant further admits that NITG's market cap on the day after the merger was more than $230 million.

Except as expressly admitted and stated, Defendant denies the remaining

allegations in Paragraph 697. 786.

Defendant states that Bear Steams & Co. collapsed in March 2008. Defendant

further admits that on or about April 2, 2006 NITG traded at $1.65 per share on a volume of

- 166 ATI-2491514vl


approximately 1200 shares. Defendant further incorporates his responses to Paragraphs 5-7 as though fully set forth herein. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 698. 787.

Defendant states that he has not been enriched by the merger. On information

and belief as to these matters, Defendant further states that no Defendant or employee of WLR has earned a return from the merger, particularly Fund II and Fund III, which has yet to recoup the hundreds of millions of dollars invested in NITG. Except as expressly admitted and stated, Defendant denies the remaining allegations in Paragraph 699. 788.

Defendant denies the allegations in Paragraph 700.

789.

Defendant denies the allegations in Paragraph 70l.

790.

In response to Paragraph 702, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 791.

Defendant denies the allegations in Paragraph 703.

792.

Defendant denies the allegations in Paragraph 704.

793.

Defendant denies the allegations in Paragraph 705.

794.

Defendant denies the allegations in Paragraph 706.

795.

In response to Paragraph 707, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 796.

Defendant admits the allegations in Paragraph 7089.

797.

Defendant admits the allegations in Paragraph 709.

798.

Defendant admits that PlaintifTs purport to paraphrase and quote from Tessoni

Depo. Ex. 17, that this document speaks for itself, and Defendant denies any allegations

- 167 ATl-2491514vl


inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 710. 799.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraphs 711A-W. 800.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 712. 801.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 713. 802.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 714. 803.

In response to Paragraph 715, Defendant incorporates the foregoing paragraphs as

if fully set forth herein. 804.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 716. 805.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 717. 806.

Defendant admits that Plaintiffs purport to paraphrase and quote from Tessoni

Depo. at 503-504, that this testimony speaks for itself, and Defendant denies any allegations inconsistent with it. Except as expressly admitted and stated, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 718. 807.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 719.

- 168 ATI-2491514vl


808.

Defendant states that the allegations in Paragraphs 720 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant is without

knowledge or information to form a belief as to the truth of the allegations in Paragraph 720. 809.

Defendant states that the allegations in Paragraphs 721 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant is without

knowledge or information to form a belief as to the truth of the allegations in Paragraph 721. 810.

Defendant states that the allegations in Paragraphs 722 state a legal conclusion not

subject to admission or denial.

To the extent a response is possible, Defendant is without

knowledge or information to form a belief as to the truth of the allegations in Paragraph 722. 811.

Defendant hereby incorporates his responses to Paragraphs 317-341 as though

fully set forth herein.

Defendant states that the allegations in Paragraphs 723 state a legal

conclusion not subject to admission or denial. To the extent a response is possible, Defendant is without knowledge or information to form a belief as to the truth of the allegations in Paragraph 723. 812.

Defendant hereby incorporates his response to Paragraph 711 as though fully set

forth herein. Defendant states that the allegations in Paragraphs 724 state a legal conclusion not subject to admission or denial.

To the extent a response is possible, Defendant is without

knowledge or information to form a belief as to the truth of the allegations in Paragraph 724. 813.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 725. 814.

Defendant is without knowledge or information to form a belief as to the truth of

the allegations in Paragraph 726.

- 169 ATI-2491514vl


815.

Defendant denies the allegations in the "Prayer for Relief' and the Paragraph

entitled "WHEREFORE." 816.

Defendant denies any and all allegations of the Complaint not expressly admitted

herein and denies that Plaintiffs are entitled to any form of relief and that he take nothing by way of this lawsuit and denies that Plaintiffs are entitled to trial by jury. SECOND DEFENSE 817.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 818.

The Complaint fails to state sufficient facts to constitute a claim or cause of

action. THIRD DEFENSE 819.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 820.

Plaintiff Brian Menezes' claims are barred in whole or in part because they were

released on September 28, 2006. All of the claims Mr. Menezes asserts in this lawsuit arose or accrued before he signed the release. Attached hereto as Exhibit A is a true and correct copy of the Confidential Settlement Agreement and Release ("Settlement Agreement") wherein Mr. Menezes released all asserted claims against the named Defendants. FOURTH DEFENSE 821.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 822.

Mr. Menezes's claims are barred in whole or in part because there has been an

accord and satisfaction. As set forth in the Settlement Agreement, he disputed, among other

- 170 ATI-2491514vl


things, the amount owed to him under his employment agreement. In satisfaction of that dispute, including any of his disputes that were based upon or as an owner of any stock or interest, he accepted and cashed several payments made in January, March and August 2007. FIFTH DEFENSE 823.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 824.

Plaintiffs' claims are barred in whole or in part by the doctrines of estoppel,

waiver, acquiescence, and/or ratification. Plaintiffs were aware of the claims they assert in this lawsuit and, on information and beliet: either voted for or acquiesced to the merger at issue in this lawsuit. SIXTH DEFENSE 825.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 826.

Plaintitfs' claims are barred in whole or in part by the business judgment rule.

Disinterested and independent special committees of SCI, FITG, and NITG, acting in good faith and using due care and relying on independent advisors and fairness opinions, approved the merger as a valid business decision. The Boards of Directors of the merging companies relied in good faith on the special committees' recommendation.

Any other claims Plaintiffs allege

concerning transactions where the Boards of SCI, FITG, and NITG were disinterested are also protected by the business judgment rule. SEVENTH DEFENSE 827.

Defendant repeats the relevant and consistent allegations of his

Defenses as if fully set forth herein.

- 171 ATI-2491514vl

previous


828.

Some of Plaintiff's claims are barred because Plaintiffs failed to make a demand

on the Board of Directors of the combined company and failed to meet the other procedural and substantive requirements for a derivative action as specified in Rule 23(b)(1) of the South Carolina Rules of Civil Procedure. EIGHTH DEFENSE 829.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 830.

Plaintiffs' claims are barred in whole or in part by principles of exculpation under

Delaware law and Article VII of the Amended and Restated Certificate of Incorporation of International Textile Group, Inc. (f1k1a Safety Components International, Inc.) and Article VII of the Certificate of Incorporation of Safety Components International, Inc., both of which are attached hereto as Exhibit B. NINTH DEFENSE 831.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 832. belief~

Plaintiffs' claims are barred in whole or in part because, on information and

they lack standing and are inadequate representatives for this action. TENTH DEFENSE 833.

Defendant repeat the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 834.

Plaintiffs' claims are barred in whole or in part because the Defendant acted in

good faith, relied in good faith on the recommendation of the special committees approving the merger and other challenged business transactions, and did no unlawful act or thing directly or

- 172 ATI-2491514vl


indirectly. The disinterested and independent special committees of SCI, FITG, and NITG relied in good faith on independent advisors and fairness opinions when recommending and approving the merger and other challenged business transactions. ELEVENTH DEFENSE 835.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 836.

Plaintiffs' claims are barred in whole or in part because Plaintiffs cannot show

causation between the conduct of the Defendant and the damages alleged. Any alleged reduction in stock price was due to independent intervening events and circumstances unrelated to the allegations set forth in the Complaint. TWELFTH DEFENSE 837.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 838.

Plaintiffs claims are barred in whole or in part under the doctrine of laches.

Plaintiffs claims arose and accrued no later than when the merger was agreed upon, and Plaintiff should have brought his lawsuit at that time. 839.

Plaintiffs' elaims are barred in whole or in part under the doctrine of laches.

Plaintiffs' claims arose and accrued no later than when the merger was agreed upon, and they should have brought this lawsuit at that time or within the time allotted for challenges in the August 29, 2006 Agreement and Plan of Merger between FITG, SCI and SCI Merger Sub, Inc ("Merger Agreement").

- 173 ATI-2491514vl


THIRTEENTH DEFENSE 840.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 841.

Plaintiff's aiding and abetting claims are barred in whole or in part to the extent

that Defendant is fiduciaries, did not knowingly participate in any alleged breach, or did not owe a duty to Plaintiff. FOURTEENTH DEFENSE 842.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 843.

Mr. Menezes' claims are barred in whole or in part because they were claims

related to those asserted by him in his earlier lawsuit captioned Menezes v. SCI, et. af. (C.A. No.: 2006-CP-23-4236), that were expressly dismissed on September 29, 2006, "with prejudice and are hereby res judicata." FIFTEENTH DEFENSE 844.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 845.

Plaintiffs' claim for unjust enrichment is precluded by the Merger Agreement. SIXTEENTH DEFENSE

846.

Defendant repeats the relevant and consistent allegations of

his prevIOUS

Defenses as if fully set forth herein. 847.

Plaintiffs' claims sounding in equity are barred because they have an adequate

remedy at law.

- 174 ATI-2491514vl


SEVENTEENTH DEFENSE 848.

Defendant repeats the relevant and consistent allegations of his

prevIOUS

Defenses as if fully set forth herein. 849.

Plaintiff's claim for conspiracy is barred because the alleged acts are consistent

with a lawful purpose, namely the combination of the companies. EIGHTEENTH DEFENSE 850.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 851.

Plaintiffs lack standing to bring this lawsuit because, on information and belief,

they have not continuously owned stock in the necessary companies from the time of the alleged breaches until the tiling of this lawsuit. NINETEENTH DEFENSE 852.

Defendant repeats the relevant and consistent allegations of his

prevIOUS

Defenses as if fully set forth herein. 853.

Plaintiffs'

claims are barred because they cannot show the necessary

particularized facts that the directors acted with the requisite scienter to negate the principles of exculpation under Delaware law and as set forth in the attached Certificates of Incorporation, which provided that "no Director of the Corporation will be personally liable to the Corporation or its stockholders for or with respect to any acts or omissions in the performance of his or her duties as a Director of the Corporation." TWENTIETH DEFENSE 854.

Defendant repeats the relevant and consistent allegations of his

Defenses as if fully set forth herein.

- 175 ATI-2491514vl

prevIOUS


855.

Plaintiffs' claims are barred, in whole or in part, to the extent that the Court does

not have personal jurisdiction over the non-resident Defendant and/or the claims violate South Carolina Code section 15-5-150 by asserting claims on behalf of non-South Carolina residents. TWENTY-FIRST DEFENSE 856.

Defendant repeats the relevant and consistent allegations of his

prevIOUS

Defenses as if fully set forth herein. 857.

Plaintiffs' claims are barred under the applicable statute of limitations because

this lawsuit was filed more than two years after the discovery of the facts giving rise to the causes of action asserted in the Complaint. TWENTY-SECOND DEFENSE 858.

Defendant repeats the relevant and consistent allegations of his previous Defenses

as if fully set forth herein. 859.

Defendant hereby gives notice that he intends to rely upon such other and further

defenses as may become available or apparent during pretrial proceedings in this action and hereby reserves all rights to amend this Answer and to assert all such defenses. WHEREFORE, Defendant prays as follows: (1)

That Plaintiffs take nothing by virtue of their Complaint and that this action be dismissed in its entirety;

(2)

That Plaintiffs demand for jury be denied;

- 176 ATI-2491514vl


(3)

For costs of suit and attorneys' fees herein incurred; and

(4)

For such other and further relief as the Court may deem just and proper.

Respectfully submitted, Dated: October 26, 2011

~~

/Ilason A. Goldsmith

LOVE, THORNTON, ARNOLD AND THOMASON, P,A. 410 F.. Washington Street P. O. Box 10045 (29603) Greenville, SC ?HONE: 864242 6360 FAX: 864 271 7972 Counsel for Defendant Daniel D. T essoni

- 177 -


STATE OF SOUTH CAROLINA COUNTY OF GREENVILLE In re Int~malionaJ Textile Gro"p Merger Litigalion,

) ) ) ) ) )

"'

"" -,'0 cr'I''''

IN THE COURT OF COMMON l>L!E~si-' _'.'.'_" ,', i :':,X,I:E 0

10'[.

r'路

n"; j", , '!', c-

CA. NO: 2009-CP-23-3346

CERTIFICATE OF SERVICE

PERSONAllY appeared before me, Barbara H. Temples, who first

b~ing

duly sworn

avers the following: that she is a legal assistant with the firm of Love, ThorntDn, Arnold & Thoma.~on,

P. A.; that she served the attached Defendant Daniel D. Tessoni's (I) ANSWER

AND DEFENSES TO AMENDED CONSOLIDATED COMPLAINT; and (2) MOTION TO DISMISS THE FIRST AMENDED CONSOLIDATED COl\.1PLAINT IN PART by US Mail to Russell

Burk~,

by HAND DELIVERY to William D. Herlong and Thomas L. Stephenson and

by EMAll to everyone listed below on the 26T11 day of October, 201 I, William D. Herlong, Esquire The Herlong Law Firm, LLC Posl Offiee Box 2105 Greenville, SC 29602 WilIiam,'a:>herlonglaw. com

W. Howard Boyd, Jr" Esquire Gallivan, White & Boyd, PA Post Offiee Box 10589 Greenville, SC 29603 hbovd@gwbl~wlirm,cum

Thomas L. Stephenson, E~quire Chrislopher D. King, Esq. Nexsen Pruet, LLC P, 0, Drawer IOMS Greenville, SC 29603-0648 tste phensoniWnex senpTile t. eom

Arthur D. Felsenfeld, Esquire Andrews Kurt, LLP 450 Lexington Avenue NewYork,NY 10017 afelsenfeldiWandrcwsklU1h.eom

Michael McConnell Jones Day Law firm 1420 Peachtree Street, N. E. Suite 800 Atlanta, GA 30309-3053 mmeonncJliWjonesdav.com

Phillip A. Kilgore, Esquire Ogletree, Deakins, Smoak & Stewart, PC The Oglelree Building 300 North Main 5t. GreL'lwille, SC 29601 Phillip.Ki Igorcliilogletrcedeakin~.com


H. Sam Mabry. 111. Esquire Haynsworth Sinkler Boyd, PA Post Office Box 2048 Greenville, SC 2%02 SIll abrvrw h,b law.eo III Russell T. Burke, Esq. Nexsen Pruet, LLC 130 Main SI., Sle 700 Columbia, SC 29201 rburkcrwnexsenprucl.COm

Further your affiant sayeth not.

Af<MA

d/.

Barbara 1-1. Temples

SWORN to hefore me this Octobcr, 2011.

UfI-_ day or

~ .~


2011-10-26 Tessoni Answer To First Amended Consolidated Complaint