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EFiled: Feb 3 2009 9:00AM EST Transaction ID 23586196 Case No. 3099-VCN

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

BAE SYSTEMS INFORMATION AND ELECTRONIC SYSTEMS INTEGRATION, INC.,

: : : : Plaintiff, : : v. : : LOCKHEED MARTIN CORPORATION : d/b/a LOCKHEED MARTIN : STS-ORLANDO, : : Defendant. :

C.A. No. 3099-VCN

MEMORANDUM OPINION Date Submitted: September 29, 2008 Date Decided: February 3, 2009

Richard L. Horwitz, Esquire, Kevin R. Shannon, Esquire, and Suzanne M. Hill, Esquire of Potter Anderson & Corroon LLP, Wilmington, Delaware, Attorneys for Plaintiff. Samuel A. Nolen, Esquire, Jeffrey L. Moyer, Esquire, Kelly E. Farnan, Esquire, and Thomas A. Uebler, Esquire of Richards, Layton & Finger, P.A., Wilmington, Delaware, Attorneys for Defendant.

NOBLE, Vice Chancellor

The world's largest defense contractor sold a major business unit to the world's third largest defense contractor. The acquirer expected that business unit to continue to do business with its former owner and believed that it had obtained sufficient and binding contractual commitments for those opportunities to persist. Although this arrangement worked well for a while, the acquirer concluded that it had not been receiving the business opportunities for which it contracted and, thus, brought this action in an effort to secure the benefit of its bargain. Although there are several ancillary disputes, the critical question is how to contract for unknown work in the future while recognizing that price and scope will necessarily depend upon the specific work. Did the parties devise a process that would bring sufficient "definiteness" to their understanding to make an enforceable contractual obligation regarding future work? Or, did they merely execute a normative "agreement to agree" that leaves the Court with a vague understanding of what the parties may have intended generally but simply cannot be enforced? Before the Court is the Defendant's motion to dismiss the Amended Complaint.

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I. BACKGROUND1 A. The Parties Plaintiff BAE Systems Information and Electronic Systems Integration Inc. ("BAE") is a wholly-owned subsidiary of the world's third largest global defense company. BAE, a Delaware corporation, specializes in aircraft self-protection systems and tactical surveillance and intelligence systems, as well as automated test equipment, support systems, and other related services. Defendant Lockheed Martin Corporation ("Lockheed"), a Maryland corporation, is the largest defense contractor in the world. Lockheed operates through numerous unincorporated business units; the three of primary importance in this action are: Lockheed Martin STS-Orlando ("LMSTS"),2 Lockheed Martin Aerospace ("LM Aero"),3 and Sanders. B. Sanders, The Sale, and The Memorandum of Agreement Lockheed's Sanders business unit was the centerpiece of Lockheed's Aerospace and Electronics Systems ("AES") business segment before 2000.

The Court accepts the truthfulness of facts properly alleged by a plaintiff when considering a defendant's motion to dismiss. Gantler v. Stephens, 2009 WL 188828, at *5 (Del. Jan. 27, 2009). These facts are as alleged in the Plaintiff's Amended Complaint. 2 BAE brings this action against Lockheed doing business as LMSTS. LMSTS was formerly known as Lockheed Martin Information Systems Company ("LMISC"). For convenience, "LMSTS" will frequently be used to refer to both LMSTS and LMISC. 3 LM Aero was formerly known as Lockheed Martin Tactical Aircraft Systems Company ("LMTAS"). For convenience, "LM Aero" will frequently be used to refer to both LM Aero and LMTAS. 2

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Consistent with the company's practice, Sanders and LMSTS executed a Memorandum of Agreement on June 14, 1996, (the "Internal MOA")4 which outlined the manner by which the two Lockheed business units would approach opportunities for Automated Test Systems ("ATS") business. These opportunities were primarily generated by a third Lockheed business unit, LM Aero, and are the subject of the parties' current dispute.5 The Internal MOA outlined which business unit would undertake different types of ATS work, freeing each to focus its energies and resources on its own allocated segments. It also addressed both thencurrent F-16 support equipment opportunities and future support equipment opportunities. In addition, the two business units executed a letter agreement on February 24, 1997, regarding the relationship between them as to the F-16 support equipment work specifically.6 Four years later, on July 13, 2000, Lockheed entered into the Transaction Agreement for the sale of its AES business, including the Sanders business unit, to BAE.7 That transaction closed on November 27, 2000; BAE paid $1.67 billion for Lockheed's AES business.

Lockheed refers to these agreements between its unincorporated business units as IntraLockheed Martin Work Transfer Agreements. 5 Am. Compl. Ex. A. 6 Id., Letter at 1. 7 Hill Aff. Ex. A. The Transaction Agreement (

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