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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MARTIN MARIETTA MATERIALS, INC., Plaintiff, v. VULCAN MATERIALS COMPANY, Defendant. C.A. No. 7102-CS

ANSWER AND COUNTERCLAIMS OF VULCAN MATERIALS COMPANY Defendant Vulcan Materials Company (Vulcan), by its undersigned attorneys, answers as follows the allegations of the Verified Complaint for Declaratory Judgment and Injunctive Relief (the Complaint) filed by the plaintiff, Martin Marietta Materials, Inc. (Martin Marietta), and asserts its own counterclaims against Martin Marietta. Except for those allegations expressly admitted herein, Defendants deny each and every allegation in the Complaint.1 INTRODUCTION This action arises out of Martin Mariettas unlawful scheme to pursue a hostile takeover of Vulcan through the wrongful use of Vulcans confidential information. Martin Marietta made and has breached an unambiguous contractual commitment to
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Except as otherwise defined herein, the defined terms in the Complaint are incorporated herein by reference. Defendants deny that the headings and the prayers for judgment contained in the Complaint constitute allegations of fact, and deny them to the extent that they are considered as such.

maintain in confidence sensitive and proprietary information received from Vulcan regarding Vulcans business and operations, as well as the fact of the parties long negotiations regarding a consensual transaction. Martin Marietta now comes to this Court, with unclean hands, seeking a declaration in equity that would bless its purposeful breach of contract. The Complaint is without merit. As detailed herein, with the assured protection of the parties confidentiality agreement, Vulcan provided to Martin Marietta nonpublic, highly sensitive commercial data about Vulcans business operations information that goes to the very heart of Vulcans competitive interests. Martin Marietta then used the information in clear violation of contractual promises it made to Vulcan in May 2010 when the two companies began to explore in earnest a negotiated merger transaction. In the period since, Martin Marietta collected information from Vulcan under the false pretense that it would respect its contractual undertakings, and then violated those contractual undertakings by misusing Vulcans confidential information in the preparation of its hostile attack. Martin Mariettas conduct constitutes not only breaches of express contractual obligations, but it offends basic principles of business ethics and fair dealing as well. As detailed in this pleading, Vulcan and Martin Marietta engaged in private negotiations regarding a potential consensual merger beginning in early 2010. The two companies are national leaders in the production of construction aggregates, including crushed stone, sand, and gravel, and both realized that a transaction could carry potential benefits. To facilitate these consensual merger talks, Martin Marietta and Vulcan entered

into a letter agreement concerning confidentiality, use restrictions, and other terms dated May 3, 2010 (the Letter Agreement). Talks between the parties regarding a consensual deal continued for more than a year. When Vulcan did not agree to a transaction on the terms that Martin Marietta had sought, Martin Marietta violated its contractual undertakings by misusing the information provided to prepare a hostile attack. With the benefit of Vulcans valuable and nonpublic information, Martin Marietta announced on December 12, 2011 that: (a) it was commencing an exchange offer for Vulcan shares and (b) it intends to mount a proxy contest to elect a dissident slate of Martin Marietta-backed directors to Vulcans board. Well aware that its conduct constituted a breach of the Letter Agreement, Martin Marietta ran into this Court on the same day it launched its hostile bid seeking a counterfactual declaration that its conduct was not prohibited by the Letter Agreement. For the reasons detailed in the Counterclaims, Martin Mariettas claims for relief cannot be sustained its conduct was prohibited by the Letter Agreement. Martin Marietta violated the Letter Agreement by using confidential Vulcan information to formulate and plan an unsolicited exchange offer to Vulcans stockholders, and then again by disclosing Vulcans protected confidential information in public filings and exchange offer documents. Vulcan would never have agreed and did not agree to turn over its sensitive internal documents to a competitor without contractual assurance that the information could not be used offensively against Vulcan in support of a hostile offer.

Martin Mariettas Complaint repeats over and over again that the Letter Agreement does not contain a so-called standstill provision. That is beside the point. By its plain terms, the Letter Agreement prohibits Martin Marietta from using Vulcans confidential Evaluation Material to launch a hostile bid or proxy contest and from disclosing confidential Evaluation Material in support of such a hostile bid or proxy contest or otherwise. Martin Marietta has flagrantly violated these contractual restrictions. There may be no standstill provision that per se bars Martin Marietta from making a hostile bid under any circumstances, but there is an enforceable contract that, among other things, prohibits certain uses of confidential information, and, as set out herein, Martin Marietta has breached it. Martin Mariettas decision to make a hostile bid for Vulcan is not a license to ignore its contractual obligations. Vulcan thus denies Martin Mariettas claims that it is entitled to declaratory and injunctive relief relieving it of its obligations under the Letter Agreement. Vulcan also asserts counterclaims seeking: (a) an order enjoining Martin Mariettas hostile attack on Vulcan, which was born of Martin Mariettas breaches of the Letter Agreement through misuse and improper disclosure of Vulcans confidential information in the public documents filed in connection with the attack, and (b) a declaration that Martin Marietta may not disclose any further confidential Vulcan information in order to cure its ongoing violation of the federal securities laws. In addition to constituting a breach of the Letter Agreement, Martin Mariettas exchange offer also breached a separate Joint Defense, Common Interest and Confidentiality Agreement dated as of May 18, 2010 whose existence Martin Marietta

failed to disclose to this Court in its Complaint and failed to disclose in its Securities Act and Exchange Act filings. And Martin Marietta has also violated provisions of the Securities Exchange Act of 1934 by failing to disclose material non-public information in its possession related to Vulcan and by seeking to consummate the exchange offer while in the possession of material nonpublic information related to Vulcan. These claims, which do not arise under the Letter Agreement, are being litigated in a separate action filed by Vulcan in the United States District Court for the Northern District of Alabama and are not at issue here. As to Martin Mariettas allegations, Vulcan responds as follows: NATURE OF THE ACTION Paragraph No. 1: This is an action for declaratory judgment and injunctive relief enforcing the nondisclosure agreement between Martin Marietta and Vulcan dated May 3, 2010 (the NonDisclosure Agreement or NDA). Martin Marietta seeks a declaration that the NonDisclosure Agreement does not prohibit (i) Martin Mariettas public offer to purchase all issued and outstanding shares of Vulcans common stock in exchange for Martin Mariettas stock (the Exchange Offer); and (ii) Martin Mariettas proposal to Vulcans stockholders to vote for the election of Martin Mariettas five independent nominees to Vulcans board of directors. Martin Marietta also seeks an injunction against Vulcan violating the exclusive Delaware forum selection clause in the Non-Disclosure Agreement. Response to Paragraph No. 1: Vulcan admits that, in order to facilitate discussion of a possible, consensual business combination with Martin Marietta, Vulcan entered into the Letter Agreement with Martin Marietta dated May 3, 2010. Vulcan further admits and avers that, after obtaining sensitive confidential information that Vulcan provided under the protection of the Letter Agreement, Martin Marietta has now announced that: (a) it is commencing a

hostile exchange offer for Vulcan shares and (b) it intends to mount a proxy contest to elect a dissident slate of Martin Marietta-backed directors to Vulcans board. The remaining allegations in Paragraph 1 of the Complaint assert legal arguments or conclusions to which no response is required; but to the extent a response is required, Vulcan denies those allegations. Paragraph No. 2: Martin Marietta is a leading producer of aggregates, crushed stone, sand and gravel used for public, commercial and residential construction. Vulcan is the nations largest producer of construction aggregates and a leader in the production of other construction materials. The Exchange Offer being commenced on December 12, 2011 is a non-coercive and non-discriminatory offer to purchase Vulcans shares, and proposes, promptly after completion of the Exchange Offer, to consummate a second-step merger of a wholly-owned subsidiary of Martin Marietta with and into Vulcan, thereby acquiring all of Vulcans shares not acquired pursuant to the Exchange Offer. Under the proposed terms of the Exchange Offer, each outstanding share of Vulcan common stock would be exchanged for 0.50 shares of Martin Marietta common stock, representing an 18% premium to Vulcans stockholders based on the average per share prices for both companies during the 30-day period ended December 9, 2011. Response to Paragraph No. 2: Vulcan admits the first two sentences of Paragraph 2 of the Complaint. Vulcan further admits that Martin Marietta commenced a hostile exchange offer for Vulcans shares on or about December 12, 2011, and refers to the terms of Martin Mariettas press release and public filings regarding its exchange offer for the complete terms thereof. Vulcan denies the remaining allegations of Paragraph 2 of the Complaint. Paragraph No. 3: Concurrent with the commencement of the Exchange Offer and the proposal for the second-step merger, Martin Marietta is notifying Vulcan of its intent to propose five individuals to be nominated for election to Vulcans currently 11-member board at Vulcans 2012 annual stockholders meeting, which Martin Marietta expects, based on Vulcans practice and bylaws, to be held on May 15, 2012.

Response to Paragraph No. 3: Vulcan admits that Martin Marietta has announced its intent to mount a proxy contest to elect a dissident slate of Martin Marietta-backed directors to Vulcans board at Vulcans next annual meeting. Vulcan denies the remaining allegations of Paragraph 3 of the Complaint. Paragraph No. 4: Martin Marietta and Vulcan have at various times discussed a combination of the companies. The combined business would present meaningful synergies and increased value for stockholders of both companies. More than a year and a half ago, the companies engaged in active discussions to explore the financial and strategic merits, and potential terms, of a business combination. Response to Paragraph No. 4: Vulcan admits that its representatives have engaged in active discussions with Martin Marietta regarding a possible consensual business combination, including sharing Vulcans sensitive and confidential business and strategic information subject to the protections of the Letter Agreement. Vulcan denies the remaining allegations of Paragraph 4 of the Complaint. Paragraph No. 5: In connection with the discussions in 2010, Martin Marietta and Vulcan executed the Non-Disclosure Agreement dated May 3, 2010. Notably, the Non-Disclosure Agreement does not contain a standstill provision prohibiting either party from making a public offer, or any agreement by Martin Marietta to limit its holdings of Vulcans shares. Martin Marietta and Vulcan instead excluded ordinary standstill provisions from their agreement, thereby preserving each partys right to make public offers in the future.

Response to Paragraph No. 5: Vulcan admits that it and Martin Marietta entered into the Letter Agreement. Vulcan states that the Letter Agreement speaks for itself and refers to the full text of the Letter Agreement for its contents. Vulcan avers that the Letter Agreement does provide that (a) Vulcan and Martin Marietta would use each others confidential information solely for the purpose of evaluating a possible business combination transaction between the two companies (and not a hostile offer made directly to stockholders) and (b) neither company would disclose the others confidential information. Vulcan further avers that the Letter Agreement gives Vulcan enforceable contractual rights against Martin Mariettas use and dissemination of Vulcans confidential information. Vulcan denies the remaining allegations of Paragraph 5 of the Complaint. Paragraph No. 6: Consistent with its unwillingness to take the steps necessary to reach a definitive agreement on a business combination that would present immediate and significant premium for its stockholders, it is anticipated that Vulcan will oppose and seek equitable relief enjoining Martin Mariettas Exchange Offer and proposal for the election of its director nominees, claiming that Martin Mariettas actions violate the Non-Disclosure Agreement. An injunction barring Martin Mariettas Exchange Offer and proposal could prevent Vulcans stockholders from directly considering their merits and could permit Vulcans board of directors to avoid giving due consideration to Martin Mariettas Exchange Offer and proposal, which its fiduciary duties require. Martin Marietta brings this action now to ensure that any claim regarding the Non-Disclosure Agreement can be resolved expeditiously so as to allow the Exchange Offer and the proposal for director nominees to be fairly considered by Vulcans stockholders. Response to Paragraph No. 6: Denied.

Paragraph No. 7: The business rationale behind Martin Mariettas proposal to Vulcans stockholders is compelling. A combination of Vulcan and Martin Marietta is expected to result in significant benefits for Vulcans stockholders in the form of increased share prices and dividends. The combined entity will be a U.S.-based company that is the global leader in construction aggregates. Martin Mariettas and Vulcans complementary businesses and locations are expected to allow the combined company to improve efficiency in production and distribution. Significant cost synergies ranging from $200 to $250 million, derived from a combination of operating efficiencies and elimination of duplicative corporate functions, are anticipated with cost savings to benefit the stockholders of the combined company. Response to Paragraph No. 7: Denied. Paragraph No. 8: A combination of Martin Marietta and Vulcan is also compelling because, in recent years, Vulcan has suffered from poor operating performance. The companys stock price declined by almost 75% from the second quarter of 2007 to the third quarter of 2011. Vulcan also failed to meet earnings estimates for eight consecutive quarters, cut its quarterly dividend from 49 cents to 25 cents per share, and then again to a penny, and had its credit rating downgraded from investment grade to non-investment grade by both Moodys Investor Services and Standard & Poors. In contrast, during the same period, Martin Marietta has set a strong track record for cost efficiency and operating performance. A recent report issued by Moodys Investor Services noted that Martin Marietta operates in geographic regions that have better withstood the contraction in public and private construction over the past several years, and that [t]he company has also been more effective at cutting costs and controlling its debt levels than [Vulcan] and generates a larger percentage of revenue from the high-margin aggregates business. Response to Paragraph No. 8: Vulcan admits that it has filed quarterly financial reports with the Securities and Exchange Commission and refers to those filings for the complete and accurate contents thereof. Vulcan further admits that ratings agencies Moodys and Standard & Poors periodically issue reports regarding both Vulcan and Martin Marietta, and refers to those

reports for the complete and accurate contents thereof. Vulcan denies the remaining allegations of Paragraph 8 of the Complaint. Paragraph No. 9: Despite the significant stockholder value the proposed business combination would create, Vulcan ceased participating in private discussions toward a negotiated transaction, compelling Martin Marietta to present its proposals directly to Vulcans stockholders. Response to Paragraph No. 9: Vulcan admits that, after active discussions with Martin Marietta regarding a negotiated, consensual business combination during which Vulcan shared sensitive confidential information with Martin Marietta those discussions ultimately ceased. Vulcan denies the remaining allegations of Paragraph 9 of the Complaint. Paragraph No. 10: Vulcan should not be allowed to obstruct Martin Mariettas proposals by invoking the Non-Disclosure Agreement as a pretext. The NDA does not prohibit the Exchange Offer or Martin Mariettas proposal to submit five nominees as independent directors for election at Vulcans 2012 annual stockholder meeting. Response to Paragraph No. 10: Denied. Paragraph No. 11: Plaintiff Martin Marietta is a North Carolina corporation, with its principal place of business in Raleigh, North Carolina. The company is a leading producer of crushed stone, sand and gravel aggregates for the construction industry, including infrastructure, agricultural, nonresidential, and residential uses. Martin Marietta also has a specialty products segment that manufactures and markets magnesia-based chemical products used in industrial, agricultural, and environmental applications and dolomitic lime sold primarily to customers in the steel industry. The companys revenues were $1.20 billion for the nine months ended on September 30, 2011. Martin Marietta currently pays a cash dividend of $1.60 per Martin Marietta share annually. The companys shares publicly trade on the New York Stock Exchange (the NYSE) under the symbol MLM and, as

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of September 30, 2011, Martin Marietta had 45.70 million common shares outstanding. Vulcans institutional investors own over 60% of the outstanding shares of Martin Marietta common stock. Response to Paragraph No. 11: Vulcan admits that Martin Mariettas shares are publicly traded on the New York Stock Exchange under the symbol MLM. Vulcan is without knowledge or information sufficient to form a belief as to the truth of the remaining allegations of Paragraph 11 pertaining to the plaintiff. Paragraph No. 12: Defendant Vulcan is a New Jersey corporation headquartered in Alabama. Vulcan produces aggregates and its primary markets include public, commercial and residential construction. Vulcan currently pays a quarterly cash dividend of a penny per Vulcan share. Vulcans common shares publicly trade on the NYSE under the symbol VMC and, as of September 30, 2011, Vulcan had 129.23 million common shares outstanding. Martin Mariettas institutional stockholders own approximately 60% of the outstanding common stock of Vulcan. Response to Paragraph No. 12: Vulcan denies the last sentence of Paragraph 12 of the Complaint and admits the remaining allegations of that Paragraph. Paragraph No. 13: This Court has subject matter jurisdiction over the claims set forth herein pursuant to 10 Del. C. 341 and the Delaware Declaratory Judgment Act, 10 Del. C. 6501, et seq. Response to Paragraph No. 13: Admitted. Paragraph No. 14: This Court has jurisdiction over Vulcan pursuant to Article 10 of the NonDisclosure Agreement, which provides that:

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Each of the parties irrevocably agrees that any legal action or proceeding with respect to this letter agreement and the rights and obligations arising hereunder ... shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). Each of the parties hereby irrevocably submits with regard to any such action or proceeding for itself and in respect of its property, generally and unconditionally, to the personal jurisdiction of the aforesaid courts and agrees that it will not bring any action relating to this letter agreement in any court other than the aforesaid courts. Response to Paragraph No. 14: Vulcan admits that the block-quoted language appears in Article 10 of the Letter Agreement, and refers to the Letter Agreement for its complete and accurate terms. Paragraph No. 15: Martin Marietta is a multi-billion dollar, publicly traded company that produces construction aggregates used for a wide range of commercial and residential applications. Vulcan is the largest producer of construction aggregates as measured by volume and revenue. By the same measure, Martin Marietta is the second largest producer. Response to Paragraph No. 15: Admitted. Paragraph No. 16: On an ongoing basis, the Martin Marietta board of directors and management are engaged in a strategic planning process designed to enhance stockholder value and position the company to take advantage of growth opportunities in its industry. As part of this process, the company has periodically evaluated a variety of possible business combinations, including a merger with Vulcan.

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Response to Paragraph No. 16: Vulcan is without knowledge or information sufficient to form a belief as to the truth of the allegations of Paragraph 16. Paragraph No. 17: Martin Marietta has been interested in a combination of the companies and the senior management of both companies have shared the view that combining the businesses would result in cost synergies and benefits to both companies stockholders. Following the economic crisis in late 2008, in about May 2010, Vulcan and Martin Marietta engaged in discussions to explore the strategic and financial merits, and potential terms of a business combination. Discussions and negotiations took place throughout the fall of 2010 and continued until May of 2011. Response to Paragraph No. 17: Vulcan admits and avers that representatives of Vulcan and representatives of Martin Marietta have discussed a possible negotiated business combination in or about May 2010; that Vulcan supplied sensitive confidential information to Martin Marietta in connection with those discussions; and that those discussions continued through June 2011. Vulcan denies the remaining allegations of Paragraph 17 of the Complaint. Paragraph No. 18: Effective May 3, 2010, Martin Marietta and Vulcan entered into the NonDisclosure Agreement in connection with their discussions. (A copy of the NDA is attached as Exhibit A to the Verified Complaint.) Significantly, the parties excluded from the Non-Disclosure Agreement ordinary standstill provisions that would have prohibited or prevented either party from making a public offer, thereby preserving each partys right to make public or unsolicited offers or proposals for a combination of the companies.

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Response to Paragraph No. 18: Vulcan admits that it and Martin Marietta entered into the Letter Agreement, and refers to the Letter Agreement for the complete and accurate terms thereof. Vulcan denies the remaining allegations of Paragraph 18 of the Complaint. Paragraph No. 19: The parties most recent negotiations took place in an economic environment and against a background of events that made and continue to make a combination of Martin Marietta and Vulcan most compelling. Response to Paragraph No. 19: Denied. Paragraph No. 20: Particularly since the beginning of the recent economic crisis, Vulcan has suffered from poor operating performance. In the past several years, Vulcan has experienced a steady decline in its stock price, significant reduction of dividends, repeated failures to meet earnings estimates and multiple credit rating downgrades. Response to Paragraph No. 20: Denied. Paragraph No. 21: During the period of April 30, 2007 to November 18, 2011, Vulcans stock price declined from $128.62 to $31.24 more than 75%. In 2009, Vulcans stock traded as low as $35 per share and this past October, Vulcans share price hit a 5-year low of $25. The stock is currently trading below $34 per share. Response to Paragraph No. 21: Vulcan admits that its stock price history is publicly available, and refers to that public stock price history for its complete and accurate contents.

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Paragraph No. 22: Faced with a shortage of cash, on October 14, 2011, Vulcan drastically reduced its quarterly dividend by 96% announcing that stockholders would only receive a penny per share dividend. This represented a significant reduction from the 25 cents per share paid on September 10, 2011. Two weeks later on November 2, 2011, Vulcan announced earnings for the third quarter ending September 30, 2011, failing to meet market projections as reported revenues of $715 million fell short by $46 million. Vulcan incurred a loss of $41 million from continuing operations, compared to a projected profit of 6 cents. Since the fourth quarter of 2008, Vulcan has missed earnings estimates every quarter except in the third quarter of 2009 when it barely met expectations. Response to Paragraph No. 22: Vulcan admits that it announced a quarterly dividend of $0.01 per common share on or about October 14, 2011, and refers to the announcement for its complete and accurate contents. Vulcan further admits that it released earnings for the quarter ended September 30, 2011 on or about November 2, 2011, and refers to its earnings release of that date for its complete and accurate contents. Vulcan further admits that its earnings history is publicly available, and refers to those public documents for their complete and accurate contents. Vulcan denies the remaining allegations of Paragraph 22 of the Complaint. Paragraph No. 23: In the last three years, both Moodys and S&P have downgraded Vulcans credit rating multiple times, citing weaker than expected performance, lack of liquidity and inability of the company to reduce debt. Response to Paragraph No. 23: Vulcan admits that Moodys and Standard and Poors have analyzed Vulcan, and it refers to Moodys and Standard and Poors reports for their complete and accurate contents. Vulcan denies the remaining allegations of Paragraph 23 of the Complaint.

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Paragraph No. 24: On October 24, 2011, Moodys issued a report titled Vulcan Materials vs. Martin Marietta Materials, A Comparison of the Two Largest US Aggregates Producers. The report noted that Vulcan, once the stronger of the two US rated aggregates producer, is now the weaker one. ... In response to the companys deteriorating condition, weve downgraded its credit ratings five notches over the past three years. Response to Paragraph No. 24: Vulcan admits that, on or about October 24, 2011, Moodys issued a report titled Vulcan Materials v. Martin Marietta Materials, A Comparison of the Two Largest US Aggregates Producers, and refers to that report for its complete and accurate contents. Paragraph No. 25: The report contrasted the steady deterioration of Vulcans credit rating with Martin Mariettas steady performance: Martin Marietta Materials, Inc., by contrast, has maintained its credit rating since late 2008. The company operates in geographic regions that have better withstood the contraction in public and private construction of the past several years. The company has also been more effective at cutting costs and controlling its debt levels than Vulcan and generates a larger percentage of revenue from the highmargin aggregates business. Response to Paragraph No. 25: Vulcan admits that, on or about October 24, 2011, Moodys issued a report titled Vulcan Materials v. Martin Marietta Materials, A Comparison of the Two Largest US Aggregates Producers, and refers to that report for its complete and accurate contents. Paragraph No. 26: Moodys report also noted that Martin Mariettas sales and earnings have held relatively steady, and recognized that the stability reflects both cost-cutting measures Martin Marietta has enacted over the past couple of years ....

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Response to Paragraph No. 26: Vulcan admits that, on or about October 24, 2011, Moodys issued a report titled Vulcan Materials v. Martin Marietta Materials, A Comparison of the Two Largest US Aggregates Producers, and refers to that report for its complete and accurate contents. Paragraph No. 27: The trend in Vulcans operating performance shows the need for change and improvement, which Martin Mariettas management, with a proven track record of managing costs effectively and producing positive operating results, can bring to Vulcans stockholders. Response to Paragraph No. 27: Denied. Paragraph No. 28: To make the proposal even more compelling, a combination of Martin Mariettas and Vulcans businesses is expected to generate significant value for both companies stockholders. The combined entity will be a U.S.-based company that is the global leader in construction aggregates with a footprint reaching across North America. The combined company will have a significantly stronger balance sheet than Vulcan currently has, which would help Vulcan achieve one of its core objectives of de-leveraging. The credit rating of the combined company is expected to be higher than Vulcans current rating. Combining the companies will likely generate significant cash flow, allowing for payment of significantly higher cash dividends than currently received by Vulcans stockholders. The all-stock nature of the offer will allow stockholders of both companies to participate in the growth and long-term value creation potential of the combined company, including the significant synergies anticipated to exceed $200 million, derived from a combination of operating efficiencies and elimination of duplicate corporate functions. Response to Paragraph No. 28: Denied. Paragraph No. 29: Despite Martin Mariettas continued expression of interest and the substantial benefits to stockholders of Vulcan and Martin Marietta that would result from the

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proposed transaction, by May of 2011, Vulcan discontinued discussions, declined to negotiate a definitive agreement with Martin Marietta. Response to Paragraph No. 29: Vulcan admits that, after serious discussions regarding a consensual business combination with Martin Marietta that continued through June 2011, and after providing Martin Marietta with Vulcans sensitive business information under the Letter Agreement, the parties were unable to reach agreement on a consensual combination. Vulcan denies the remaining allegations of Paragraph 29 of the Complaint. Paragraph No. 30: As private discussions and negotiations between Martin Marietta and Vulcan failed to lead to a definitive agreement, on December 12, 2011, Martin Marietta is announcing its proposal to Vulcan and commencing the Exchange Offer by filing with the SEC a registration statement on Form S-4 required by the Securities Act. The prospectus to be filed with the registration statement contains required disclosures including, but not limited to, the summary of the offer, background and reason for the offer, terms and conditions of the offer and risk factors associated with the proposed transaction, among other things. Response to Paragraph No. 30: Vulcan admits and avers that Martin Marietta has commenced a surprise hostile exchange offer for Vulcan shares and has filed a Form S-4 with the Securities and Exchange Commission. Vulcan denies the remaining allegations of Paragraph 30 of the Complaint. Paragraph No. 31: Concurrent with the commencement of the Exchange Offer, Martin Marietta is announcing its intention to nominate five independent directors of Vulcan for election at the 2012 annual stockholders meeting. The board currently consists of 11 directors, with 5 directors anticipated to stand for election at the 2012 stockholder meeting. Therefore, even if Martin Mariettas 5 director nominees are elected at the 2012 stockholders meeting, they will still not constitute a majority of Vulcans board of directors.

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Response to Paragraph No. 31: Vulcan admits and avers that Martin Marietta has announced its intention to mount a proxy contest to elect a dissident slate of Martin Marietta-backed directors to Vulcans board at Vulcans next annual meeting. Vulcan further admits that, even if Martin Marietta does nominate candidates as directors and those candidates are elected, they will not constitute a majority of Vulcans board of directors absent further events. Vulcan denies the remaining allegations of Paragraph 31 of the Complaint. Paragraph No. 32: In connection with the stockholder proposal, Martin Marietta intends to file a proxy statement on Form 14A in advance of Vulcans 2012 annual stockholders meeting by which it will seek to obtain the votes of Vulcans stockholders in favor of Martin Mariettas board nominees. Response to Paragraph No. 32: Vulcan is without knowledge or information sufficient to form a belief as to the truth of the allegations in Paragraph 32 of the Complaint. Paragraph No. 33: It is anticipated that Vulcan will contend that the Non-Disclosure Agreement prohibits Martin Mariettas Exchange Offer and proposal to nominate independent directors for election at the 2012 annual stockholders meeting and, invoking the NDA, that Vulcan will seek to enjoin Martin Mariettas actions, which would cause grave financial injury to Martin Marietta. To prevent Vulcan from interfering with Martin Mariettas Exchange Offer and stockholder proposal for director nominees, this Court should declare that the NDA does not prohibit Martin Mariettas actions and that Vulcan is not entitled to equitable relief to enjoin Martin Mariettas Exchange Offer and proposal. Vulcan should also be enjoined from filing or prosecuting in any other jurisdiction any legal action or proceeding with respect to the NDA in violation of the forum selection clause in the Non-Disclosure Agreement.

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Response to Paragraph No. 33: Vulcan admits that the Letter Agreement prevents Martin Marietta from using or publicly disclosing confidential information that Vulcan provided to Martin Marietta to conduct a hostile exchange offer for Vulcan shares or to mount a proxy contest to elect a dissident slate of Martin Marietta-backed directors to Vulcans board. Vulcan further admits that it intends to utilize all means reasonably available, including litigation if necessary, to protect Vulcans stockholders and other constituencies, enhance the value of Vulcans shares, defend the Companys confidential information, and defend against Martin Mariettas illegal actions. Vulcan otherwise denies the allegations of Paragraph 33 of the Complaint. FIRST CAUSE OF ACTION (Declaratory Judgment that the Non-Disclosure Agreement Does Not Prohibit Martin Mariettas Exchange Offer or Stockholder Proposal) Paragraph No. 34: Martin Marietta repeats the allegations contained in the preceding paragraphs as if fully set forth herein. Response to Paragraph No. 34: Answering paragraph 34, Vulcan repeats and incorporates its answers to the paragraphs realleged therein. Paragraph No. 35: The Non-Disclosure Agreement between Martin Marietta and Vulcan provided for the parties to exchange certain nonpublic information concerning the respective companies in connection with an evaluation of a potential business combination.

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Response to Paragraph No. 35: Admitted. Paragraph No. 36: The Non-Disclosure Agreement does not contain a standstill provision or other limitation on each partys right to make public offers to the others stockholders. Nor is there any agreement by Martin Marietta to limit its holdings of Vulcans shares. By excluding any such provision purporting to prohibit or deter public offers, the parties preserved their right to commence public offers for the purchase of one anothers stock. Response to Paragraph No. 36: Respecting the allegations of Paragraph 36 of the Complaint, Vulcan states that the Letter Agreement speaks for itself and refers to full text of the Letter Agreement for its contents. Vulcan further avers that the limitations that Martin Marietta agreed to on its use and disclosure of Vulcans confidential information are enforceable contractual rights that Martin Marietta is violating. Vulcan denies any remaining allegations of Paragraph 36 of the Complaint. Paragraph No. 37: Therefore, by commencing the Exchange Offer and making a proposal to Vulcans stockholders to support its nominees to Vulcans board, Martin Marietta will not violate the Non-Disclosure Agreement. Response to Paragraph No. 37: Denied. Paragraph No. 38: Once the Exchange Offer is commenced, it is anticipated that Vulcan will seek to prevent its stockholders from duly considering the offer by seeking to enjoin it on the ground that Martin Mariettas actions violate the Non-Disclosure Agreement. Martin Marietta, thus, has an actual interest in the resolution of this issue now through a declaration that the Non-Disclosure Agreement is inapplicable to and does not prohibit

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Martin Mariettas Exchange Offer or stockholder proposal to elect Martin Mariettas nominees to Vulcans board. Response to Paragraph No. 38: Vulcan admits that it intends to utilize all means reasonably available, including litigation if necessary, to protect its stockholders and other constituencies, enhance the value of Vulcans shares, defend the confidential information of the Company, and defend against Martin Mariettas illegal actions, and Vulcan denies the remaining allegations of the first sentence of Paragraph 38 of the Complaint. The remaining allegations of Paragraph 38 of the Complaint assert legal arguments or conclusions to which no response is required; but to the extent a response is required, Vulcan denies those allegations. Paragraph No. 39: Under the Delaware Declaratory Judgment Act, 10 Del. C. 6501, et seq., Delaware courts have power to declare rights, status and other legal relations, whether or not further relief is or could be claimed. 10 Del. C. 6501. According to the Act, [a] person ... whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract or franchise and obtain a declaration of rights, status or other legal relations thereunder. Id. 6502. A contract may be construed either before or after there has been a breach thereof. Id. 6503. The power of Delaware courts to grant declaratory relief is to be liberally construed and administered. Id. 6512. Response to Paragraph No. 39: Paragraph 39 of the Complaint asserts legal arguments or conclusions to which no response is required. Paragraph No. 40: Pursuant to Rule 57 of the Court of Chancery of the State of Delaware, [t]he existence of another adequate remedy does not preclude a judgment for declaratory relief

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in cases where it is appropriate. The adequacy of a potentially available remedy at law which Martin Marietta does not currently have, in any case is, therefore, irrelevant to the entertainment of the present cause of action. Response to Paragraph No. 40: Paragraph 40 of the Complaint asserts legal arguments or conclusions to which no response is required. Paragraph No. 41: Court of Chancery Rule 57 also authorizes the Court to order a speedy hearing of an action for a declaratory judgment, which Martin Marietta hereby seeks this Court to order. Response to Paragraph No. 41: Paragraph 41 of the Complaint asserts legal arguments or conclusions to which no response is required. Paragraph No. 42: The existing controversy as to the applicability of the Non-Disclosure Agreement to Martin Mariettas Exchange Offer and stockholder proposal is substantial and justiciable, because it affects the parties in a concrete manner so as to provide the factual predicate for reasoned adjudication. The controversy is also of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. A declaratory judgment in this matter will conclusively clarify the legal rights and obligations of the parties, and will be of practical assistance to them. The judgment sought will terminate the controversy and remove an uncertainty regarding Martin Mariettas rights and obligations under the Non-Disclosure Agreement. (See 10 Del. C. 6505.) Response to Paragraph No. 42: Paragraph 42 of the Complaint asserts legal arguments or conclusions to which no response is required. Paragraph No. 43: Accordingly, and based on the facts and circumstances alleged herein, Plaintiffs are entitled to a judicial declaration that the Non-Disclosure Agreement does not apply to

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and, in any case, does not prohibit (i) Martin Mariettas Exchange Offer; and (ii) Martin Mariettas proposal to Vulcans stockholders to vote for the election of Martin Mariettas five nominees to Vulcans board of directors. Response to Paragraph No. 43: Denied. SECOND CAUSE OF ACTION (Declaratory Judgment that Vulcan is not Entitled to Equitable Relief under the Non-Disclosure Agreement to Enjoin Martin Mariettas Exchange Offer of Stockholder Proposal) Paragraph No. 44: Martin Marietta repeats the allegations contained in the preceding paragraphs as if fully set forth herein. Response to Paragraph No. 44: Answering paragraph 44, Vulcan repeats and incorporates its answers to the paragraphs realleged therein. Paragraph No. 45: As stated above, by commencing the Exchange Offer and making proposals to Vulcans stockholders to support its proposed nominees to Vulcans board, Martin Marietta has not violated the Non-Disclosure Agreement. Response to Paragraph No. 45: Denied. Paragraph No. 46: Vulcan, however, is expected to contend that the Non-Disclosure Agreement has been violated and that Martin Mariettas actions should be enjoined, an injunction that would threaten grave financial injury to Martin Marietta. To prevent Vulcan from interfering with Martin Mariettas Exchange Offer and stockholder proposal, this Court should declare that Vulcan is not entitled to equitable relief enjoining Martin Mariettas Exchange Offer or Martin Mariettas stockholder proposal for director nominees on the alleged ground that the Non-Disclosure Agreement has been violated.

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Response to Paragraph No. 46: Vulcan admits that it intends to utilize all means reasonably available, including litigation if necessary, to protect its stockholders and other constituencies, enhance the value of Vulcans shares, defend the Companys confidential information, and defend against Martin Mariettas illegal actions. Vulcan denies the remaining allegations of Paragraph 46 of the Complaint. Paragraph No. 47: This Court, as stated above, may grant the requested declaratory relief under the Delaware Declaratory Judgment Act, 10 Del. C. 6501, et seq., and Chancery Court Rule 57. (See supra paragraphs 39-40.) Response to Paragraph No. 47: Paragraph 47 of the Complaint asserts legal arguments or conclusions to which no response is required. Paragraph No. 48: The existing controversy as to Vulcans entitlement to injunctive relief under the Non-Disclosure Agreement against Martin Mariettas Exchange Offer and stockholder proposal is substantial and justiciable, because it affects the parties in a concrete manner so as to provide the factual predicate for reasoned adjudication. The controversy is also of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. A declaratory judgment in this matter will conclusively clarify the legal rights and obligations of the parties, and will be of practical assistance to them. The judgment sought will terminate the controversy and remove an uncertainty regarding Martin Mariettas rights and obligations under the Non-Disclosure Agreement. (See 10 Del. C. 6505.) Response to Paragraph No. 48: Paragraph 48 of the Complaint asserts legal arguments or conclusions to which no response is required.

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Paragraph No. 49: Article 9 of the Non-Disclosure Agreement also allows the parties to seek equitable relief, including injunction and specific performance. Response to Paragraph No. 49: Vulcan admits that the quoted phrase appears in Article 9 of the Letter Agreement, and refers to the Letter Agreement for its complete and accurate terms. Paragraph No. 50: Accordingly, and based on the facts and circumstances alleged herein, Plaintiffs are entitled to a judicial declaration that Vulcan has no right to an injunction against (i) Martin Mariettas Exchange Offer; and (ii) Martin Mariettas proposal to Vulcans stockholders to vote for the election of Martin Mariettas five nominees to Vulcans board of directors. Response to Paragraph No. 50: Denied. THIRD CAUSE OF ACTION (Injunction Prohibiting Vulcan from Prosecuting any Action under the NonDisclosure Agreement in any other Jurisdiction) Paragraph No. 51: Martin Marietta repeats the allegations contained in the preceding paragraphs as if fully set forth herein. Response to Paragraph No. 51: Answering paragraph 51, Vulcan repeats and incorporates its answers to the paragraphs realleged therein. Paragraph No. 52: Article 10 of the Non-Disclosure Agreement between Martin Marietta and Vulcan provides that the Delaware Court of Chancery is the exclusive forum for the parties to resolve any dispute. Article 10 contains a forum selection clause, which provides that

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any legal action or proceeding with respect to [the Non-Disclosure Agreement] and the rights and obligations arising [there]under ... shall be brought and determined exclusively in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware .... As expressly provided by the Non-Disclosure Agreement, therefore, the parties must resolve any dispute in this Court. Response to Paragraph No. 52: Vulcan admits that Article 10 of the Letter Agreement states, among other things, that any legal action or proceeding with respect to this letter agreement and the rights and obligations arising hereunder . . . shall be brought and determined in the Delaware Court of Chancery and any state appellate court therefrom within the State of Delaware (or, if the Delaware Court of Chancery declines to accept jurisdiction over a particular matter, any state or federal court within the State of Delaware). . . . Vulcan refers to the Letter Agreement for its complete and accurate terms, and otherwise denies the remaining allegations of Paragraph 52 of the Complaint. Paragraph No. 53: In the wake of Martin Mariettas Exchange Offer, however, Vulcan is expected to sue Martin Marietta for alleged breaches of the Non-Disclosure Agreement and to enjoin the Exchange Offer in a jurisdiction other than this one, in violation of the NonDisclosure Agreements forum selection clause. By bringing an action in another jurisdiction, Vulcan will prejudice Martin Mariettas bargained for rights under the NonDisclosure Agreement. Response to Paragraph No. 53: Vulcan admits that it intends to utilize all means reasonably available, including litigation in this or other jurisdictions, to protect its stockholders and other constituencies, enhance the value of Vulcans shares, defend the Companys confidential information, and defend against Martin Mariettas illegal actions. allegations of Paragraph 53 of the Complaint. Vulcan denies the remaining

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Paragraph No. 54: Accordingly, and based on the facts and circumstances alleged herein, Martin Marietta is entitled to specific performance of the forum selection clause in Article 10 of the Non-Disclosure Agreement and an injunction prohibiting Vulcan from filing or prosecuting in any other jurisdiction any legal action or proceeding with respect to [the Non-Disclosure Agreement] and the rights and obligations arising [there]under. Response to Paragraph No. 54: Denied.

DEFENSES Without assuming any burden of proof that it would not otherwise bear, Vulcan asserts the following additional defenses: FIRST DEFENSE FAILURE TO STATE CLAIM The Complaint fails to state a claim upon which relief can be granted. SECOND DEFENSE BREACH Martin Marietta is not entitled to the relief sought because Martin Marietta has breached its own obligations under the Letter Agreement. THIRD DEFENSE UNCLEAN HANDS Martin Marietta should not be entitled to declaratory or equitable relief because it is barred by the doctrine of unclean hands. Among other things, Martin Marietta gained access to Vulcans confidential information under the pretense that it would be used solely in connection with friendly merger discussions, only to then attempt to use that information to launch a hostile takeover.

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FOURTH DEFENSE ESTOPPEL Having induced Vulcan to provide confidential information to Martin Marietta under the pretense that such information would be used solely in connection with consensual merger discussions, Martin Marietta is estopped from now seeking to obtain declaratory or injunctive relief permitting it to use such information as part of a hostile takeover attempt. FIFTH DEFENSE EQUITABLE DEFENSES Martin Mariettas misuse of Vulcans confidential information not only constitutes a violation of Martin Mariettas contractual obligations, it also offends basic notions of business ethics and fair dealing. Accordingly, Vulcan raises and reserves all applicable equitable defenses. ADDITIONAL DEFENSES In addition to the enumerated defenses identified above, Vulcan reserves the right to raise any additional defenses that may become available or appropriate.

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COUNTERCLAIMS For its counterclaims against Martin Marietta, Vulcan respectfully states as follows: 1. In reliance on the Letter Agreement, Vulcan shared highly sensitive and

confidential business information with Martin Marietta. Over the course of more than a year, the top management of Vulcan shared proprietary and nonpublic business, market, operational, and financial data (including highly sensitive analyses of potential synergies achievable in a potential combination) with their counterparts at Martin Marietta. Vulcan would never have exchanged this information with Martin Marietta without the protections of the Letter Agreement or if the information could lawfully be used to support a hostile attack against the Company. 2. With the benefit of this highly valuable and nonpublic information and

upon finding that it could not convince Vulcan to accept a deal that did not make sense for Vulcans shareholders and other constituencies Martin Marietta decided to breach the Letter Agreement by using the confidential information it had received to prepare a hostile bid to take control of Vulcan on its own terms. Then, having misused information obtained under the Letter Agreement to formulate its surprise hostile attack, Martin Marietta turned around and disclosed portions of the confidential information in an attempt to win public support for its opportunistic bid. Absent the misuse and misappropriation of mission-critical confidential information described herein, Martin Marietta would not have been able to pursue its hostile offer.

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3.

Through its Counterclaims, Vulcan seeks to prevent Martin Marietta from

improperly pursuing a hostile attack against Vulcan with the aid of confidential information that Vulcan shared with Martin Marietta subject to the protections of the Letter Agreement. PARTIES 4. Plaintiff Vulcan is a New Jersey corporation whose shares trade on the

New York Stock Exchange. With sales exceeding $2.4 billion in 2010, Vulcan is the nations leading producer of construction aggregates, including crushed stone, sand, and gravel. Vulcan is also a major producer of asphalt mix, ready-mixed concrete, and cement. Vulcan currently operates more than 300 production facilities in the United States, Mexico, and the Bahamas that collectively employ more than 8,000 people. Vulcan is headquartered in Birmingham, Alabama. 5. Defendant Martin Marietta is a North Carolina corporation whose shares

trade on the New York Stock Exchange. Like Vulcan, Martin Marietta is a producer of construction aggregates. Martin Marietta is headquartered in Raleigh, North Carolina. FACTUAL ALLEGATIONS A. Vulcan and Martin Marietta initiate serious merger discussions in spring 2010 and execute the Letter Agreement. 6. From time to time, senior executives of Vulcan and Martin Marietta had

held general, preliminary discussions about the possibility of a business combination. Before 2010, however, none of those talks progressed beyond early explorations of interest.

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7.

In April 2010, shortly after C. Howard Nye became Martin Mariettas

Chief Executive Officer, Mr. Nye and Donald M. James, Chairman and CEO of Vulcan, renewed talks about combining the two companies. On April 22, 2010, at a trade association meeting, Mr. Nye and Mr. James engaged in a preliminary but wide-ranging discussion of issues relating to a merger. The merger they were discussing was to have been a consensual, negotiated transaction between the two companies. 8. To facilitate further discussions and the sharing of sensitive materials in

furtherance of this potential transaction, Vulcan and Martin Marietta determined to enter into a letter agreement relating to the confidentiality of information, restrictions on the use of information, and other matters. On May 3, 2010, Vulcan and Martin Marietta executed the Letter Agreement, which provides for the exchange and limited use of nonpublic company materials. B. The terms of the Letter Agreement. 9. The Letter Agreement is a contract between Vulcan and Martin Marietta

that was designed to permit the exchange of nonpublic commercial information in connection with a potential negotiated transaction. In the preamble to the agreement, the parties defined Transaction to mean a possible business combination transaction between Martin Marietta and Vulcan. Only transactions between the two companies can qualify as a Transaction under the Letter Agreement. The definition of Transaction does not encompass a tender or exchange offer made by Martin Marietta directly to Vulcans shareholders. Vulcan and Martin Marietta never discussed a hostile offer aimed directly at the Vulcan shareholders. Vulcan would never have agreed to provide the

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highly sensitive information contemplated by the Letter Agreement if such information could be used for the purposes of planning an unsolicited exchange offer. A major reason for entering into the Letter Agreement was the assurance that the information exchanged thereunder would only be used for pursuing a consensual merger. Without that assurance, Vulcan would not have exchanged sensitive and proprietary information with Martin Marietta. 10. The Letter Agreement broadly defines Evaluation Material to include all

nonpublic information concerning a Transaction and [the companies] respective business, financial condition, operations, assets and liabilitieswhether furnished or communicated orally, in writing, electronically, by inspection or otherwisein whatever form, including all analysis, compilations, forecasts, studies, reports, interpretations, financial statements, summaries, notes, data, records, or other documents and materials. 11. Paragraph 2 of the Letter Agreement provides that Evaluation Material

will be used solely for the purpose of evaluating a Transaction; that the disclosing partys Evaluation Material will be kept confidential; and that the parties will not disclose or use for purposes other than the evaluation of a Transaction any of the other partys Evaluation Material in any manner whatsoever. 12. Paragraph 3 of the Letter Agreement provides that neither party is

permitted to disclose to any other person, other than as legally required, the fact that any Evaluation Material has been made available, or that discussions or negotiations have or are taking place concerning a Transaction or any of the terms, conditions, or other

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facts with respect thereto (including the status thereof or that this letter agreement exists). 13. Paragraph 4 of the Letter Agreement sets out the procedures to be

followed if a party to the Letter Agreement is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any Evaluation Materials or any information regarding the negotiations between the parties or the existence of the Letter Agreement. Paragraph 4 requires that any party disclosing information on the basis of legal necessity provide the other party with notice and take all steps to maintain the confidentiality of any information disclosed to another party. The Letter Agreement contains no other provisions that permit the disclosure of confidential material. 14. Paragraph 5 of the Letter Agreement provides that its confidentiality

restrictions would survive any merger discussions: Notwithstanding the termination of any discussions or the return or destruction of the Evaluation Materials, each party and its Representatives will continue to be bound by their obligations of confidentiality and other obligations hereunder for a period of two (2) years from the date hereof. 15. Paragraph 6 of the Letter Agreement specifically contemplated the

circumstances presented here, providing that a party cannot use its desire to trade in the shares of the other party as an excuse to disclose confidential information. Recognizing that the Letter Agreement facilitated the sharing of highly sensitive, nonpublic information, the parties acknowledged in paragraph 6 that they were aware that applicable United States securities laws would prohibit any person who has material

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nonpublic information about a company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. The parties further agree[d] that they will not use . . . any Evaluation Material in contravention of the United States securities laws, including the Exchange Act or any rules and regulations promulgated thereunder. 16. In the event of a breach of the Letter Agreement, the parties agreed in

paragraph 9 that money damages would not be sufficient remedy and that the nonbreaching party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. The contract makes clear, however, that [s]uch remedies shall not be deemed to be the exclusive remedies for a breach of this letter agreement, but shall be in addition to all other remedies available at law or equity. C. Vulcan provides Martin Marietta with sensitive, material, nonpublic information. 17. Following the execution of the Letter Agreement, Vulcan and Martin

Marietta continued discussing a consensual merger transaction. In light of the significant regulatory antitrust risk that would come with any transaction between the two companies, and to facilitate the exchange of legal analysis relating to the potential antitrust issues, Vulcan and Martin Marietta entered into a second, separate agreement that expressly provided for a joint defense and common interest privilege between the parties. That agreement was the Joint Defense and Confidentiality Agreement dated as

of May 18, 2010. The Joint Defense and Confidentiality Agreement specifically stated that [n]either the existence of or any provision contained in this Agreement shall affect

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or limit any other confidentiality agreements, or rights or obligations created thereunder, between the Parties in connection with the Transaction. Thus, while the Joint Defense and Confidentiality Agreement made clear the joint defense relationship of the parties, it did not displace or attenuate the binding force of the Letter Agreement. 18. With these agreements in place, Vulcan and Martin Marietta commenced a

review to identify overlaps between their two businesses. These overlaps posed risk to any combination: to the extent the companies did business in the same markets, there was substantial likelihood that antitrust regulatory authorities would either require costly divestitures of businesses in key markets or refuse to approve the deal at all. The information exchanged in this review reflected Vulcans confidential proprietary database regarding the production volume, distribution capabilities, and material quality of each specific quarry, pit, and yard that Vulcan owns and operates extremely confidential information that goes to the very heart of the Companys operations and strategy, as well as information developed by Vulcans market research staff about other competitors in Vulcans markets. 19. Without such inside information, Martin Marietta would have been unable

to accurately determine the production volume of Vulcans locations; Vulcans distribution capabilities at any individual quarry; or the material quality of output from Vulcans quarries. Furthermore, Vulcan has devoted substantial resources to the creation and maintenance of its proprietary database with information about its own locations as well as those of competitors, which information was used to evaluate the overall competitive conditions in the various overlap markets. The details of locations, estimated

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production data, estimated capacity, and estimated stone quality is invaluable in a competitive analysis, is not readily available (and unavailable publicly), was gathered and maintained at substantial cost to Vulcan, and was shared with Martin Marietta pursuant to the Letter Agreement. And since individual quarries generally remain relatively stable over the long term, the information remains highly sensitive over an extremely long business cycle. Neither Vulcan nor any aggregates company would ever permit its competitors access to this kind of information absent strict contractual protections, because the potential negative competitive effects are considerable. 20. Vulcan management also shared the tax basis of the Vulcan operations

that had been identified as possible divestiture candidates and discussed the tax leakage that would result. From that information, Martin Marietta could calculate how much tax Martin Marietta would have to pay if it sold the Vulcan operations in taxable divestitures as a result of antitrust review. 21. Numerous members of Martin Mariettas senior management and legal

team were given access to Vulcans confidential information and were involved in the process of reviewing and analyzing this material. These individuals included, among others, Roselyn Bar, Howard Nye, and Anne Lloyd. 22. In mid-June 2010, after reviewing the information made available

pursuant to the Letter Agreement, the two companies reached a joint conclusion and recommendation about the divestitures and other actions that would likely be necessary to secure regulatory approval. The overlaps in assets and markets proved an even greater obstacle than Vulcan initially expected, and the divestitures likely to be required in the

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event of a deal were significant. Accordingly, a combination would require asset sales in a business environment suffering from reduced demand for construction materials and in the short time frame required by the Department of Justice. Vulcan also informed Martin Marietta that the tax basis of the assets in questions was low, and that a sale of those assets would therefore burden the combined company with a significant tax bill. 23. All of this confidential, nonpublic information that Vulcan shared with

Martin Marietta to perform a joint antitrust review directly and materially enhanced Martin Mariettas ability both to evaluate the benefits of a deal with Vulcan and to analyze Vulcans ongoing value. None of it would have been shared without the critical assurances that Martin Marietta made in the Letter Agreement. D. Vulcan and Martin Marietta share information to conduct a joint analysis of potential synergies. 24. The joint antitrust analysis that emerged from this work also substantially

enhanced Martin Mariettas ability to calculate synergies achievable from a merger. Synergies are usually a key driver of strategic mergers, because the efficiencies in operations and expenses that arise from the combination (achieved by, for example, cost reductions made possible by reducing the size of the work force and eliminating redundant operations) provide much of the economic advantage. But divestitures can affect the degree of synergies achievable and thus the value of the merger to the companies and their shareholders. 25. In the course of their joint analysis of synergies, Vulcan provided Martin

Marietta with sensitive nonpublic information that would materially benefit Martin Mariettas ability to evaluate a potential merger. Representatives from Vulcan and

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Martin Mariettas financial teams, including their respective Chief Financial Officers, met repeatedly from July 2010 through March 2011 to reach a consensus estimate of synergies. To do so as accurately as possible, at Martin Mariettas behest, Vulcan provided Martin Marietta with an expense template with a high level of detail on Vulcans overhead costs by division and region. Based on this detail and Martin Mariettas reciprocal information, the companies financial teams together estimated achievable overhead cost reductions from a merger a figure that would provide the lions share of potential synergies. Vulcan also provided Martin Marietta with information concerning its procurement and purchasing services, another area in which the parties identified sizable additional synergies. Without this information, Martin Marietta would have been largely in the dark about key aspects of Vulcans business, and as a result would have been unable to undertake meaningful analysis of the potential divestitures, synergies, and benefits of a potential combination. 26. For all these reasons, the confidential information shared by Vulcan in the

joint effort to calculate synergies was highly valuable to Martin Marietta, which could evaluate the benefits of a combination with Vulcan with a much greater degree of accuracy than it could have on its own. Martin Marietta was contractually obligated to use this sensitive information solely to pursue a negotiated deal. But it instead misused the information in evaluating and then launching its hostile attack.

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E.

Vulcan determines that the benefits to shareholders from a merger would be minimal because of likely antitrust complications. 27. As the parties legal and financial teams were jointly evaluating the

antitrust risks to and financial benefits of a potential merger, Mr. James and Mr. Nye continued discussing the points of a potential deal, including the exchange ratio, likely divestitures, potential synergies, and certain social issues, such as the corporate governance of a combined firm and the location of the headquarters of the merged company. Throughout these discussions, Vulcan remained concerned to safeguard the interests of its stockholders and other corporate constituencies, including employees, customers, and the communities in which Vulcan operates, as expressly permitted by New Jersey statute. But beyond those critical issues, the simple economics remained problematic. For a deal to be attractive to Vulcan, the synergies from a combination would have to be so great that they not only offset the loss of key divested assets (possibly unloaded at a fire-sale price) and the resulting taxes that would have to be paid, but also offered compelling value to Vulcans shareholders. 28. On June 27, 2011, Mr. James met with Mr. Nye in Atlanta. At that

meeting, Mr. James told Mr. Nye that Vulcan did not believe that a combination beneficial to Vulcan shareholders was viable at that time. Mr. James further indicated that given the exchange ratios discussed, the level of forced divestitures of key assets that would be required and the negative tax implications that would follow, and the disappointingly low level of synergies that could be achieved, a combination would be value-destroying for Vulcan and its shareholders and did not make strategic or economic

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sense. Mr. Nye responded by asking Mr. James to reach out to Martin Marietta to resume discussions if Vulcans position changed in the future. F. Martin Marietta plots and launches a surprise hostile offer. 29. Unbeknownst to Vulcan, Martin Marietta had no intention of living within

its contractual obligations. Mr. Nye now knew that Mr. James would not agree to a deal on terms favorable to Martin Marietta at the expense of Vulcan shareholders, so Martin Marietta began preparations for a hostile bid. Less than two months following the June 27, 2011 meeting (according to a disclosure made in Martin Mariettas Form S-4), Martin Marietta assembled a group of high-level executives and outside advisors including the same inside and outside legal advisors who had recently received sensitive data and nonpublic information from Vulcan, and the same financial team that was scrubbing Vulcans operations with Vulcans personnel to calculate synergies to assess and structure an exchange offer to Vulcan shareholders. 30. The information Martin Marietta had learned under the Letter Agreement

was put to use, not for the consensual, negotiated transaction contemplated by the Letter Agreement, but for this hostile bid. With the benefit of valuable nonpublic information about divestitures and associated tax liabilities, synergies, and the operational data of Vulcan at a divisional level, all obtained pursuant to the Letter Agreement, Martin Marietta was able to update its financial projections and models and calculate just how lucrative an acquisition could be and just how low an offer it could try to make to convince Vulcan shareholders, who lacked the same information, to tender their shares.

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31.

On November 15, 2011, Martin Marietta purchased 1000 shares of Vulcan

stock, no doubt so it could claim to have standing as a Vulcan shareholder in connection with potential litigation arising out of its planned hostile offer and possibly seek to obtain certain information from Vulcan. Martin Marietta executed this purchase of Vulcan stock while in possession of material nonpublic information and in violation of the federal securities laws. 32. Martin Marietta announced its hostile exchange offer on December 12,

2011. The offer provides for half a share of Martin Marietta common stock in exchange for each tendered share of Vulcan common stock the market equivalent of approximately $36.69 per share at the time of the offer. The market immediately deemed the offer inadequate, trading Vulcan shares up to $38.70 by the end of that same day. Analysts observed that Martin Marietta was attempting to buy[] at the trough of the industry and force the lowest price possible, commenting that [i]f youre a long-term shareholder, you definitely believe [the offer is] low. 33. In conjunction with its offer, Martin Marietta filed on December 12, 2011

a tender offer schedule on SEC Schedule TO (together with its amendments, the Schedule TO) and a registration statement on SEC Form S-4. Neither filing notified Vulcans shareholders that Martin Marietta had received material nonpublic information pursuant to the Letter Agreement. 34. Simultaneous with announcement of the offer, on December 12, 2011,

Martin Marietta commenced two lawsuits seeking declaratory and injunctive relief, this action and another in the Superior Court of New Jersey. The New Jersey state court

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action seeks, among other things, to remove certain New Jersey corporate law and Vulcan charter obstacles that Martin Marietta perceived may, sometime in the future, get in the way of its hostile takeover attempt. G. Martin Mariettas exchange offer is based on material, nonpublic information that Vulcan provided pursuant to the Letter Agreement. 35. Martin Marietta used information obtained under the Letter Agreement to

formulate its hostile bid. The Martin Marietta representatives who received the confidential information about Vulcan were also involved in Martin Mariettas decision to pursue a takeover of Vulcan and in structuring the terms and price of the hostile offer. (Martin Mariettas General Counsel in fact signed both the Letter Agreement and the Schedule TO.) These representatives must have used indeed, they could not have avoided using confidential information received under the Letter Agreement in deciding whether to pursue the hostile attack, in evaluating its likely costs (especially with respect to likely divestitures), synergies, and benefits, and in structuring its terms and price. 36. Martin Marietta has stated that its goal is to acquire control of Vulcan. In

its public filings and statements, Martin Marietta has sought to buttress the attractiveness of its offer by repeated reference to the synergies it expects to achieve as a result of the combination. The offer thus relies on the exact information that representatives of both companies, including senior management, discussed subject to the Letter Agreement over many months, and as recently as June 27, 2011. Pursuant to the Letter Agreement, Vulcan provided to Martin Marietta material nonpublic information regarding overlaps,

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divestitures, and synergies that Martin Marietta did not previously possess and that reduce the amount of synergies attainable in a merger. It is not plausible that, in pursuing Martin Mariettas hostile takeover attempt, these various members of Martin Mariettas management team could eliminate from their minds all knowledge about Vulcan that they gained from having access to Vulcans confidential information. 37. In addition to misusing confidential information in preparing its hostile

offer, Martin Marietta breached the Letter Agreement by publicly disclosing significant portions of that information. This included Vulcans privileged legal analyses with regard to achieving antitrust approval and Vulcans internal synergy estimates. In its Form S-4 and Schedule TO, Martin Marietta disclosed, among other things, that Vulcans CEO suggested a structure in which assets required to be divested to satisfy regulatory requirements would be put into a separate company and spun off to shareholders in a taxfree transaction, Form S-4 at 26; that Vulcans CEO indicated that he believed a combination of the two companies would result in approximately $100 million in synergies, id.; and that he also believed that potential tax leakage and the ability to divest overlap businesses were significant impediments to the transaction, id. at 29. This information is all confidential Evaluation Material under the Letter Agreement. Martin Marietta has violated the express terms of that agreement by publicly disclosing this information. 38. In addition, Martin Marietta flouted the plain words of paragraph 3 of the

Letter Agreement, which provides that neither Martin Marietta nor Vulcan may disclose the fact that any Evaluation Material has been made available [pursuant to the Letter

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Agreement], that discussions or negotiations have or are taking place concerning a Transaction or any of the terms, conditions or other facts with respect thereto (including the status thereof or that this letter agreement exists). Martin Marietta knowingly and willfully breached every element of this provision. In its public filings, Martin Marietta repeatedly disclosed the fact that Evaluation Material has been made available; recites in slanted detail the discussions and negotiations that took place concerning a Transaction; and not only disclosed that the Letter Agreement exists but filed it in this Court as an exhibit to its preemptive lawsuit. There can be no question of the breach. H. Vulcan has suffered irreparable harm by virtue of Martin Mariettas unlawful conduct. 39. As a result of Martin Mariettas aforementioned unlawful actions, Vulcan

and its shareholders have suffered substantial and irreparable harm and are continuing to suffer such harm. If Martin Marietta is permitted to pursue and consummate its hostile exchange offer on the basis of the improper conduct described herein, Vulcan and its shareholders will be irreparably harmed because Vulcans own internal, nonpublic confidential information will have been misappropriated in violation of the Letter Agreement and will be used, directly or indirectly, for purposes other than those authorized by Vulcan. In particular, such information will be used by Martin Marietta in an ongoing effort to seize control of Vulcan at an inadequate price, which effort has been forever tainted by Martin Mariettas reliance on misappropriated information.

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COUNT I (Breach of the Letter AgreementInjunctive Relief and Specific Performance) 40. Vulcan repeats the allegations contained in the preceding paragraphs as if

fully set forth herein. 41. Vulcan and Martin Marietta entered into the Letter Agreement, a binding

contractual agreement for valuable consideration. The Letter Agreement remains in full effect. 42. The Letter Agreement expressly limits the permissible uses of information

exchanged thereunder. Among the other restrictions detailed herein, Martin Marietta is permitted to use Vulcans confidential Evaluation Material solely for the purpose of evaluating a Transaction, which is defined as a possible business combination transaction between Martin Marietta Materials, Inc. and Vulcan Materials Company. Transaction does not include a hostile offer made directly to Vulcans shareholders. 43. The Letter Agreement further requires that the Evaluation Material

provided by Vulcan be kept confidential and not disclose[d] by Martin Marietta. The Letter Agreement also prohibits Martin Marietta from disclosing the fact that Evaluation Material has been made available or that discussions or negotiations have or are taking place or even that th[e] letter agreement exists. 44. Martin Marietta acknowledged that the Evaluation Material it was

receiving from Vulcan under the Letter Agreement constituted material nonpublic information and that the U.S. securities laws prohibited Martin Marietta from acquiring Vulcans securities while in possession of such material nonpublic information. Martin

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Marietta agreed that it will not use . . . any Evaluation Material in contravention of the United States securities laws. 45. Pursuant to the Letter Agreement, Vulcan shared with Martin Marietta a

great deal of Vulcans highly sensitive, nonpublic information, including confidential information related to Vulcans quarries, business operations, financial condition, technology systems, and analyses related to potential divestitures that would be necessary in any transaction between Vulcan and Martin Marietta. 46. Still bound by the Letter Agreement, Martin Marietta devised and

executed a hostile attack on Vulcan. Martin Marietta used the information provided under the Letter Agreement to coordinate, price, plan, and structure its hostile offer in violation of the Letter Agreements clear use restrictions. This hostile attack amounts to a breach of paragraph 2 of the Letter Agreement, because Martin Marietta is using Vulcans Evaluation Material in connection with an exchange offer made directly to Vulcans shareholders and in connection with a proxy fight. Neither use is permitted by the Letter Agreement. 47. By virtue of the documents provided under the Letter Agreement, Martin

Marietta is in possession of material, nonpublic information about Vulcan. Martin Mariettas offer to acquire Vulcan stock thus violates the United States securities laws and amounts to a breach of paragraph 6 of the Letter Agreement. 48. The documents Martin Marietta has filed in connection with its hostile

offer publicly disclose certain Evaluation Material provided by Vulcan pursuant to the Letter Agreement, including the fact that the parties were in merger discussions and the

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existence of the Letter Agreement itself. The disclosure of Vulcans Evaluation Material violates the Letter Agreements unambiguous command that Evaluation Material be kept confidential. 49. By virtue of these breaches of the Letter Agreement, Martin Marietta has

irreparably harmed and continues to irreparably harm Vulcan and its shareholders. 50. Vulcan has no adequate remedy at law. Although Martin Mariettas

violation of the Letter Agreement in the form of a hostile exchange offer and proxy contest has caused and threatens to cause financial harm to Vulcan and its stockholders, a damages award would be imprecise. By contrast, an award of specific performance might entirely or in large part eliminate the need for a determination of damages. 51. Moreover, if Martin Marietta is able to succeed in taking control of

Vulcan through a breach of the Letter Agreement, determining a damages award for that breach would be impracticable or fail to do complete justice, because by that point Martin Marietta would either control Vulcan or have merged with it. 52. Vulcan has a contractual right to enforce specifically the terms and

conditions of the Letter Agreement. Martin Marietta expressly agreed that money damages would not be sufficient remedy for any breach of this letter agreement by either party or any of its Representatives and that the non-breaching party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. (Emphasis added.) 53. By reason of the foregoing, Vulcan is entitled to a decree of specific

performance or an injunction preliminarily and permanently barring Martin Marietta from

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pursuing or consummating its exchange offer and requiring that Martin Marietta withdraw the documents it has publicly filed that disclose information provided to Martin Marietta pursuant to the Letter Agreement. COUNT II (Declaratory Judgment that the Letter Agreement prohibits Martin Marietta from publicly disclosing Vulcans confidential information) 54. Vulcan repeats the allegations contained in the preceding paragraphs as if

fully set forth herein. 55. Vulcan and Martin Marietta entered into the Letter Agreement, a binding

contractual agreement for valuable consideration. The Letter Agreement remains in full effect. 56. The Letter Agreement requires that the Evaluation Material provided by

Vulcan be kept confidential and not disclose[d] by Martin Marietta. 57. Pursuant to the Letter Agreement, Vulcan shared with Martin Marietta

Vulcans highly sensitive, nonpublic information, including confidential information related to Vulcans quarries, business operations, financial condition, technology systems, and analyses related to potential divestitures that would be necessary in any transaction between Vulcan and Martin Marietta. 58. As a result, Martin Marietta is now in possession of material, nonpublic

information concerning Vulcan. Martin Mariettas hostile offer to acquire shares of Vulcan stock violates the federal securities laws because Martin Marietta may not make an offer to exchange Vulcan securities while in possession of material, nonpublic

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information about Vulcan, which Martin Marietta expressly acknowledged in paragraph 6 of the Letter Agreement. 59. As a result of its present and ongoing violation of the federal securities

laws, it is anticipated that Martin Marietta will seek to disclose the material, nonpublic information respecting Vulcan that it has in its possession. If Martin Marietta were permitted to make such disclosures, Vulcans sensitive data would be available to its competitors, harming Vulcan. 60. Such public disclosure of Vulcans confidential Evaluation Materials by

Martin Marietta would violate the terms of the Letter Agreement, including Articles 2 and 3 thereof. 61. By bringing this action seeking declarations regarding the meaning and

application of the Letter Agreement, Martin Marietta has conceded that declaratory relief construing the Letter Agreement is appropriate here, including under the Delaware Declaratory Judgment Act, 10 Del. C. 6501, et seq., and Court of Chancery Rule 57. Martin Marietta has likewise conceded in bringing this action that the controversy as to the applicability of the Letter Agreement to Martin Mariettas hostile exchange offer and proxy contest is substantial, justiciable, and of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. 62. Accordingly, and based on the facts and circumstances alleged herein,

Vulcan is entitled to a judicial declaration that: (a) the Letter Agreement applies to Vulcans confidential Evaluation Material provided to Martin Marietta, and (b) the Letter Agreement prohibits Martin Marietta from publicly disclosing that confidential

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Evaluation Material in connection with Martin Mariettas hostile exchange offer and proxy contest. WHEREFORE, Vulcan respectfully requests that this Court: a. order Martin Marietta to specifically perform its obligations under the Letter Agreement and refrain from violating the Letter Agreement by: (i) withdrawing its hostile exchange offer for Vulcan shares and (ii) withdrawing all public filings containing confidential material disclosed in breach of the Letter Agreement; b. declare that: (i) the Letter Agreement applies to Vulcans confidential Evaluation Material provided to Martin Marietta, and (ii) the Letter Agreement prohibits Martin Marietta from publicly disclosing that confidential Evaluation Material in connection with Martin Mariettas hostile exchange offer and proxy contest; c. order Martin Marietta to account to Vulcan for all damages suffered by Vulcan as a result of the wrongs complained of herein; d. award Vulcan such costs of court and reasonable attorneys fees and expenses as may be allowed by law; and e. award Vulcan such other and further relief as is just and appropriate.

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SEITZ ROSS ARONSTAM & MORITZ LLP /s/ Collins J. Seitz, Jr. Collins J. Seitz, Jr. (Bar No. 2237) Garrett B. Moritz (Bar No. 5646) Eric D. Selden (Bar No. 4911) 100 South West Street, Suite 400 Wilmington, DE 19801 (302) 576-1600 Attorneys for Defendant/CounterclaimPlaintiff Vulcan Materials Company

OF COUNSEL: William Savitt Andrew J.H. Cheung Ryan A. McLeod (Bar No. 5038) Adam S. Hobson WACHTELL, LIPTON, ROSEN & KATZ 51 West 52nd Street New York, NY 10019 December 20, 2011

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CERTIFICATE OF SERVICE I, Collins J. Seitz, Jr., hereby certify that on December 20, 2011, I caused a copy of the foregoing Answer and Counterclaims of Vulcan Materials Company to be filed and served through LexisNexis File & Serve on the following counsel of record: Robert S. Saunders Skadden, Arps, Slate, Meagher & Flom LLP One Rodney Square P.O. Box 636 Wilmington, DE 19899-0636 /s/ Collins J. Seitz, Jr. Collins J. Seitz, Jr. (Bar No. 2237)