Safety Components International Inc.

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Safety Components International Inc. Securities Settlement

The class action lawsuit was settled for $10 million in cash. The derivative lawsuit was settled for $26 million in cash and $45 million in non cash benefits to be paid to the new International Textile Group Inc. The following is a summary of the proceedings in this lawsuit: ‘This matter (the Action) is pending before the Court of Common Pleas for Greenville County, South Carolina (the Court). The Action involves the merger (Merger) on October 20, 2006, of two companies, SCI and the former International Textile Group, Inc. (FITG), that Plaintiffs allege were controlled by Wilbur L. Ross, Jr., his investment company, W.L. Ross & Co., LLC, and his affiliates. After the Merger, SCI was renamed the new International Textile Group, Inc. (or NITG; ticker: ITXN). Plaintiffs allege that, among other things, the Merger was not entirely fair to the SCI minority shareholders, that Mr. Ross and his affiliates breached their fiduciary duties to SCI minority shareholders, and/or aided and abetted others in breaching their fiduciary duties to SCI minority shareholders. Plaintiffs also allege gross negligence and aiding and abetting breach of fiduciary duty against RSM EquiCo Capital Markets LLC (now known as McGladrey Capital Markets LLC, but referred to herein as RSM), which served as the financial advisor to SCI special committee charged with determining that the Merger was fair. Plaintiffs further allege that certain defendants were unjustly enriched by the Merger. The same claims are also made on behalf of NITG itself. The portion of the Action involving these claims on behalf of the SCI minority shareholders as of the date of the Merger is the Class Action. The portion of the Action involving these claims on behalf of NITG is the Derivative Action. Defendants have denied all material allegations against them, and have asserted various affirmative defenses in the Action. The Plaintiffs are FURSA Alternative Strategies LLC, FURSA Master Global Event Driven Fund, LP, and FURSA Company, Ltd. (collectively, FURSA), Ramius Securities, LLC, Ramius Credit Opportunities Master Fund Ltd. (collectively, Ramius), Brian P. Menezes (Mr. Menezes), Joseph and Marilyn Asiaf (together, the Asiafs), and Juanita Marett (Mrs. Marett). The Plaintiffs other than Mr. Menezes represent the Class of all minority shareholders of SCI as of the Merger with damages in excess of $100. As such, they are referred to as Class Representatives. In addition, the Plaintiffs, with the exception of the Asiafs (because they do not currently own NITG stock), represent NITG in connection with the Derivative Claims. In that capacity they are referred to as Derivative Representatives. The Defendants (Defendants) are Wilbur L. Ross Jr., WL Ross & Co. LLC, WLR Recovery Fund II, L.P., WLR Recovery Associates II, LLC, WLR Recovery Fund III, L.P., WLR Recovery Associates III, LLC, Michael J. Gibbons, David H. Storper, David L. Wax, Joseph L. Gorga, Gary L. Smith, Stephen B. Duerk, Dr. Daniel D. Tessoni, and McGladrey Capital Markets, LLC (f/k/a RSM EquiCo Capital Markets, LLC) (RSM). This case is a consolidation of three separate lawsuits, the first of which was filed in April 2008 and the last of which was filed in August 2009 (which together are referred to as the Actions). The matter has been extensively litigated. Counsel for the parties have conducted nearly 100 days of depositions and more than one million pages of documents (over 152 gigabytes) were produced in the action. More than thirty-five separate expert reports have been submitted on behalf of the parties. The Court certified the claims by the Class Representatives as a Class Action by an Order dated January 10, 2013. In the same Order, the Court denied a motion to disqualify the Derivative Representatives from bringing the Derivative Action on behalf of NITG. Potential Class Members were previously notified of the Class Action pursuant to that Order, and given the opportunity to not participate in the case. No potential Class Members elected to not participate. The Court has ruled on various motions related to the discovery of facts surrounding the Merger, and substantive issues involving the legal claims. The parties were not able to reach a settlement after two days of mediation in 2011, nor after additional negotiations in 2012. Negotiations were re-started in 2013, and the Settlement was the product of an arm-length negotiation process that lasted for several months, settling just before trial was to begin in September 2013. The proposed Settlement involves a compromise of disputed claims and does not mean that the Defendants have admitted liability as alleged in the Action. Class Counsel have, since 2008, investigated and evaluated the claims asserted in the Action and have determined that the proposed Settlement is fair, reasonable, and adequate for the Class as a whole and for NITG. If approved, the Settlement will result in cash payments to Class Members to the extent provided herein and consideration for the benefit of NITG as provided in the Notice of Derivative Action Settlement (below). The Settlement also avoids the risks and delays of continuing the Action, including the risk that the Defendants would prevail either at trial or on appeal, in which case Class Members and NITG could receive nothing. The Settlement also avoids disputes regarding whether the case should proceed as a Class Action and/or a Derivative Action, whether the Class Representatives were subject to unique defenses that would defeat their claims or disqualify them from being Class Representatives and thus end the Class Action, whether certain of the Defendants were controlling shareholders of both SCI and FITG, whether and to what extent the entire fairness standard of review applies, whether Defendant Dr. Daniel D. Tessoni was an independent director of SCI, whether RSM was grossly negligent, whether the Merger caused the decline of NITG stock price after the Merger, whether Class Members have legally compensable damages or only the company does, and, if so, the amount of legally compensable damages suffered by individual Class Members. Judge D. Garrison Hill of the Circuit Court for the State of South Carolina has preliminarily approved the Settlement as fair and reasonable for the Class and NITG and authorized the sending of this Notice of Settlement to you. A final review of the proposed Settlement will be conducted by the Court at the Settlement Hearing to assure it is fair, reasonable, and adequate for the Class and NITG. The Settlement will go forward if the Court gives final approval to the Settlement (both the Class Action Settlement and the Derivative Action Settlement portions), and if any appeals that may be filed are resolved in favor of Settlement.’

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