54308736-0--16480

UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF MICHIGAN

In re

Chapter 11

ENERGY CONVERSION DEVICES, INC.

Case No. 12-43166-TJT (Jointly Administered)

ENERGY CONVERSION DEVICES LIQUIDATION TRUST,

Adversary No.: 18-_______

Plaintiff,

COMPLAINT

-againstOVONYX, INC., TYLER LOWREY, MICRON TECHNOLOGY, INC., AND OVONYX MEMORY TECHNOLOGY, INC. Defendants. Plaintiff, the ENERGY CONVERSION DEVICES LIQUIDATION TRUST (the “Trust”), by its attorneys Honigman Miller Schwartz and Cohn LLP and Quinn Emanuel Urquhart & Sullivan, LLP, brings this complaint against defendants OVONYX, INC., TYLER LOWREY, MICRON TECHNOLOGY, INC., and OVONYX MEMORY TECHNOLOGY, INC. (f/k/a Carlow Innovations, LLC). The Trust alleges as follows: NATURE OF THE CASE

1.

This Th is is is a case case of of the the Trus Trustt vindi vindica cati ting ng its its val valua uabl blee cont contra ract ctual ual rig right htss to tec techn hnol ology ogy

that, without embellishment, could easily revolutionize the way data is stored, secured, computed, and organized in computers, smart phones, data centers and virtually any other consumer or commercial electronic product that needs to store and use large amounts of data quickly

including

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high-performance

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computer

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learning. This technology fills the speed speed gap between memory technologies known as DRAM and NAND, in some cases leading to thousand-fold increases in performance. 2.

As desc descri ribed bed in det detai aill belo below, w, the the Defe Defenda ndant ntss have have kno knowi wing ngly ly and and mat mater eria ially lly

sought to undermine these contractual rights. Thus, the Trust must seek this Court’s intervention to seek compensation for the loss caused by the Defendants’ misconduct. 3.

Thee Tru Th Trust st is the the succ succes esso sorr in in int inter eres estt to to Ener Energy gy Conver Conversi sion on Dev Devic ices es,, Inc. Inc.

(“ECD”), which filed for bankruptcy in 2012. ECD is the brainchild of Stan Ovshinsky, a renowned Michigan inventor and scientist who invented numerous technologies in the area of energy and information information and was granted over 400 patents.

Beginning in the 1960s, Mr. Mr.

Ovshinsky, and then ECD, obtained patents and developed devices concerning, among other things, “phase-change” memory, a form of nonvolatile memory that is far superior to other forms of memory. 4.

This Th is tech technol nology ogy now stan stands ds on the the

edge edge of extra extraor ordi dinar naril ily y

val valua uabl blee

commercialization. In 2015, Defendant Micron Technology, Inc. (“Micron”) announced, along with its joint venture partner Intel Corporation, the commercial development of “3D XPoint,” which, on information and belief, employs the intellectual property and device that ECD invented. 5.

It is hard hard to to unde unders rsta tate te how valu valuab able le 3D 3D XPo XPoin int, t, and and the the techn technol ology ogy power powering ing it

that came from ECD and Ovonyx, is to Micron and the computer and memory industry. Micron's and Intel’s own words on July 28, 2015, the day of the 3D XPoint announcement, sum it up: Intel Corporation and Micron Technology, Inc. today unveiled 3D XPoint™ technology, a non-volatile memory that has the potential to revolutionize any device, application or service that benefits from fast access to large sets of data. Now in production, 3D XPoint technology is a major breakthrough in memory process technology and the first new memory category since the introduction of NAND flash in 1989.

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The explosion of connected devices and digital services is generating massive amounts of new data. To make this data useful, it must be stored and analyzed very quickly, creating challenges for service providers and system builders who must balance cost, power and performance trade-offs when they design memory and storage solutions. 3D XPoint technology combines the performance, density, power, non-volatility and cost advantages of all available memory technologies on the market today. The technology is up to 1,000 times faster and has up to 1,000 times greater endurance than NAND, and is 10 times denser than conventional memory. 6.

Thee Trus Th Trustt has has valu valuab able le cont contra ract ctua uall righ rights ts rel relat ating ing to the the tec techn hnol ology ogy powe poweri ring ng 3D 3D

XPoint, which rights rights have been breached and interfered with by the Defendants. Specifically, under the 1999 Agreement (defined below), the Trust is entitled to payment of royalties by Defendant Ovonyx, Inc. (“Ovonyx”) and to rights of first refusal over sales of Ovonyx stock or transfers of assets assets of Ovonyx. The Defendants have sought to destroy these valuable rights. 7.

In 1998, 1998, ECD ECD and and Defe Defend ndan antt Tyler Tyler Lo Lowr wrey ey (a (a form former er seni senior or off offic icer er of of Mic Micro ron) n)

entered in the 1998 Agreement (defined below) that, among other things, called for the formation of Defendant Ovonyx, which would be jointly owned by ECD, Lowrey and one additional investor. Defendant Lowrey would later become president and CEO of Defendant Ovonyx and would remain in these important decision-making decision-making positions until July 31, 2015.

Lowrey

promised to cause Ovonyx to pay to ECD 0.5% of all Ovonyx’s revenues (the “Royalty”). Further, Lowrey and ECD promised each other that any time Ovonyx sold any stock or assets, or if either of them sold any stock of Ovonyx, each would have a right of first refusal in connection with such transaction. 8.

In 199 1999, 9, Defen Defenda dant nt Ovony Ovonyx, x, Lo Lowr wrey ey,, and and ECD ECD ent enter ered ed in the the 199 1999 9 Agr Agree eeme ment nt

pursuant to which Ovonyx agreed to perform the obligations set forth in the 1998 Agreement, including paying the Royalty and being subject to the right of first refusal. For years after, after, Ovonyx did in fact perform its obligations by paying the Royalty when due and Lowrey otherwise acknowledged the obligations contained in each agreement. 3 28207502.1 12-43166-tjt

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9.

ECD ECD fil filed ed for for ban bankr krup uptcy tcy in 201 2012, 2, and sold sold its its stoc stock k int inter eres ests ts in Ovo Ovony nyx x to

Micron, but retained all the rights under the 1998 Agreement and 1999 Agreement, which rights have been transferred to the Plaintiff. Thus, the Plaintiff should have benefitted from payment of the Royalty and, if Ovonyx ever sold assets or stock of Ovonyx, or if Lowrey sold any of his Ovonyx stock, it would benefit from the option o ption it had under the right of first refusal provision. 10. rights.

But the Defend Defendant antss ensur ensured ed that that the Plaint Plaintiff iff was denied denied its valuabl valuablee contra contractu ctual al

First, Ovonyx has never paid the Royalty since the bankruptcy sale, in breach of

Ovonyx’s obligations under the 1999 Agreement and Lowrey’s obligations under the 1998 Agreement. This failure to pay the Royalty is intentional; Lowrey Lowrey for the first time disclosed to the Trust in May 2018 that

. At the time, Micron and Lowrey owned a majority of the stock in Ovonyx and appointed a majority of the members of the board of directors. 11.

Seco Second, nd, as the Trus Trustt only only rece recent ntly ly lear learne ned, d, in July July 201 2015, 5,

12.

No noti notice ce was was prov provide ided d to the Trust Trust so so that that the the Trus Trustt could could determ determine ine whether whether to

exercise its right of first refusal. refusal. On information and belief, belief, the value of stock in in Ovonyx that Micron acquired, amounting to more than 60% of the stock, was far more valuable than what

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Micron paid, and had the Trust been informed of the proposed sale, it could have exercised its right of first refusal to acquire this valuable asset. 13.

Third, Third, on July July 31, 2015, 2015, Ovonyx Ovonyx transf transferr erred ed a majorit majority y of its valuab valuable le inte intelle llectu ctual al

property to Defendant Ovonyx Memory Technology, Inc., (“OMT”),

. No notice was provided to the Trust so that the Trust Trust could determine whether to exercise its right of first refusal in respect of this transfer to OMT. 14.

The Defenda Defendants nts thus breache breached, d, and/ and/or or tortuo tortuously usly interf interfere ered d with with,, the the 1998 1998

Agreement and 1999 Agreement. The Trust was substantially damaged by the Defendants. 15.

On behalf behalf of ECD ECD and its credit creditors ors,, who who were were left left bein being g owed owed in in exces excesss of $120

million, the Trust seeks compensation for losses incurred as the result of the Defendants’ misconduct. JURISDICTION AND VENUE

16.

This This Court Court has jurisd jurisdict iction ion over over this this action action pursuan pursuantt to to 28 U.S.C. U.S.C. §§ 157, 157, 1334

and 1367 because involves state-law claims that relate to the ECD chapter 11 case. The Plan provides that this Court retains such jurisdiction. Venue is proper in this district under 28 U.S.C. § 1409 as this proceeding arises in or is related to the ECD case under Title 11 of the United States Code. Venue is also proper in in this district under 28 U.S.C. § 1391 because a substantial part of the events giving rise to the claim occurred in this district. 17.

Claims Claims 1 to to 5 are non-core non-core matter matterss purs pursuant uant to 28 U.S. U.S.C. C. §157 (c)(1) (c)(1).. Howeve However, r,

any matters concerning or relating to interpretation of the Plan or the Bankruptcy Sale (as each is defined below) is a “core” matter. 5 28207502.1 12-43166-tjt

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18.

Plaint Plaintif ifff conse consents nts to entr entry y of a fina finall order order on these these claims claims by this this Court. Court. PROCEDURAL BACKGROUND

19.

On Febr February uary 14, 201 2012, 2, ECD ECD file filed d a volu volunta ntary ry petitio petition n for for reli relief ef under under chapte chapterr 11

of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Michigan (the “Bankruptcy Court”). 20.

On June June 20, 201 2012, 2, ECD ECD and and its its affi affilia liate te file filed d a Seco Second nd Amend Amended ed Join Jointt Chapt Chapter er 11 11

Plan of Reorganization (the “Plan”) that, among other things, would establish the Trust for the commencement of causes of action belonging to ECD. 21.

The Plan Plan was was confirm confirmed ed on on July July 30, 2012 and became became effect effective ive on Augus Augustt 28, 28,

2012. On the effective date, the Trust was established. 22.

On Decemb December er 21, 201 2017, 7, the the Plai Plainti ntiff ff filed filed a motio motion n in in this this Court Court reque requesti sting ng

authority to serve subpoenas under Rule 2004 of the Federal Rules of Bankruptcy Procedure on Lowrey, Ovonyx, Micron, and OMT OMT (each a “Rule 2004 Subpoena”). This Court granted such authority by order entered on January 9, 2018. 23.

Thee Plain Th Plainti tiff ff serv served ed each each Rule Rule 2004 2004 Subpo Subpoena ena..

Each Each of Lo Lowr wrey ey,, Ovo Ovony nyx, x,

Micron, and OMT produced some, but not all, of the requested documents. 24.

In accorda accordance nce with with the the Rule Rule 200 2004 4 Subpo Subpoena ena,, on on May May 24, 2017, 2017, the the Plai Plainti ntiff ff

deposed Lowrey. 25.

On info informa rmatio tion n and and beli belief, ef, documen documents ts respons responsive ive to the the Rule Rule 200 2004 4 Subpo Subpoena enass

were not preserved by some or all the Defendants. Indeed, on information information and belief, numerous responsive documents appear to have been destroyed. THE PARTIES

26.

Plaint Plaintif iff, f, the the Energ Energy y Conver Conversio sion n Device Devicess Liquid Liquidati ation on Trust Trust (“Plai (“Plainti ntiff ff”” or the the

“Trust”), is a trust created and formed under the laws of the State of Michigan by the August 28, 6 28207502.1 12-43166-tjt

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2012 Trust Agreement. John Madden has been appointed and serves as the Trustee. Trustee. The Trust beneficiaries are former creditors of ECD. The Trust is the successor to all assets of ECD, including rights under contracts where ECD was a party. 27.

Defenda Defendant nt Ovony Ovonyx, x, Inc. Inc. (“Ov (“Ovony onyx”) x”) is a Nevada Nevada corpor corporati ation on with with,, on inform informati ation on

and belief, its principal executive offices located at 8000 S. Federal Way, in Boise, Boise, Idaho. On information and belief, Ovonyx is wholly owned by Defendant Micron. 28.

Tyler Tyler Lowrey Lowrey is an individ individual ual who, who, on on info informa rmatio tion n and and belief belief,, resi resides des in

Henderson, Nevada. 29.

Defenda Defendant nt Micr Micron on Techno Technology logy,, Inc. Inc. (“Mi (“Micro cron”) n”) is a Delawa Delaware re corp corpora oratio tion n with with its its

principal executive offices located at 8000 S. Federal Way, in Boise, Idaho. 30.

Ovonyx Memory Technology, Inc. (f/k/a Carlow Innovations LLC) (“OMT”) is a

Virginia corporation with its principal executive offices located at 1940 Duke Street, Suite 200, in Alexandria, Virginia. FACTUAL BACKGROUND

31.

Founde Founded d in 1961 in Detr Detroit oit,, Michi Michigan gan,, and and until until it file filed d for for bankr bankrupt uptcy, cy, ECD had

been at the forefront of materials science and renewable energy technology for over 50 years. ECD’s achievements in the laboratory are well documented, having been granted over 100 U.S. and international patents in its continuing operations. 32.

ECD had been been a publicl publicly y trad traded ed company company listed listed on the the NASD NASDAQ AQ Global Global Select Select

Market under the ticker symbol “ENER.” ECD was primarily a holding company that operated through its various business segments. One such business segment was Ovonyx, a joint venture formed to commercialize ECD’s proprietary non-volatile phase change random access memory technology used in such applications as smartphones, computers, digital cameras and microelectronics. 7 28207502.1 12-43166-tjt

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The 1998 Agreement

33.

In 1998, 1998, Lowrey Lowrey and ECD entere entered d into into that that certai certain n “Ovon “Ovonic ic Infor Informat mation ion Handlin Handling g

Devices Development and Commercialization Contract” (the “1998 Agreement”). Pursuant to the 1998 Agreement, ECD and Lowrey agreed to jointly pursue the evaluation, development, licensing or manufacturing of ECD’s proprietary electronic Ovonic Information Handling Devices. The term “Ovonic” is a term of art that combines Stan Ovshinsky’s last name and the word electronics. 34.

Lowr Lo wrey ey ente entere red d into into the 199 1998 8 Agre Agreem emen entt becaus becausee he beli believe eved d that that ECD ECD had had

interesting technology for making memory circuits, and Lowrey was expert in commercialization and manufacturing of memory circuits. 35.

The 199 1998 8 Agree Agreement ment contemp contemplat lated ed the the form formati ation on of an enti entity ty that that woul would d be co-

owned by ECD and Lowrey. Lowrey. The initial board members of the Entity were Stan Ovshinsky Ovshinsky and Lowrey. 36.

Upon Upon form formati ation on of of the the Enti Entity, ty, until until termin terminati ation on of of the the 1998 Agreem Agreement ent ECD

agreed to grant to the Entity an exclusive license in “the field,” which the agreement defined to include “evaluating developing licensing or manufacturing of ECD’s proprietary electronic Ovonic Information Handling Devices such as those that are Chalcogenide based including the electronic Ovonic threshold thyrister-like power switch, Ovonic encryption, Ovonic neural networks and current-modified crystallinity-based and current-modified resistance-based devices and products.” 37.

Upon Upon form formati ation on of the Entity Entity,, until until termin terminati ation on of of the the 1998 1998 Agreem Agreement ent,, Lowrey Lowrey

agreed to assign his rights in intellectual property in “the field” to the Entity without any encumbrances.

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38.

Sectio Section n 10 of the the 1998 1998 Agreem Agreement ent provid provided ed that that upon ECD’s ECD’s writte written n reques request, t, “the “the

Entity shall thereafter pay every three months 0.5% of the Entity’s subsequent revenues to ECD” (the “Royalty”). The Royalty was material to ECD and specifically requested by ECD. 39.

Sectio Section n 11 contain contained ed a Right Right of of Firs Firstt Refus Refusal al (the (the “Firs “Firstt Refus Refusal al Righ Right”) t”)..

Pursuant to the First Refusal Right, Lowrey and ECD granted to each other “a right of first refusal on the other’s sale of stock in the Entity, intellectual property in the field, and any stock or asset sales by the Entity, a right exercisable only within thirty days of notice and promptly executed on the same basis as the proposed purchaser.” 40.

The First First Refusa Refusall Right Right was materi material al to to ECD ECD becau because, se, among among othe otherr thing things, s, it

ensured that if the Entity attempted to transfer assets, ECD would have the option to purchase the assets itself. This provision was particularly important if Ovonyx transferred a majority majority of its assets that produced (or were likely to produce) revenue subject to the Royalty. 41.

Shortly Shortly after after execu executio tion n of the 1998 Agreem Agreement ent,, in June 199 1999, 9, ECD ECD and Lowrey Lowrey

formed Ovonyx, which is the “Entity” within the meaning of the 1998 Agreement. 42.

Sectio Section n 16 of the 1998 Agreeme Agreement nt containe contained d the the provi provisio sions ns for termin terminati ating ng the

1998 Agreement.

As of today, the 1998 Agreement has not terminated,

Phase-Change Memory Development

43.

The 1998 Agreem Agreement ent gov govern erns, s, among among other other things things,, inte intelle llectu ctual al proper property ty

associated with with “phase-change” memory. Phase-change memory is a material that changes phases (i.e., from one form of matter to another) and that transition can be used to store memory. 44.

PhasePhase-cha change nge memory memory is a way way to stor storee non-v non-vola olatil tilee info informa rmatio tion, n, whic which h is is

information that is retained even when the power to a device (such as a computer) is turned off.

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While there are other forms of non-volatile memory, phase-change memory has several superior aspects, including writing data at faster speeds and having greater endurance. 45.

PhasePhase-cha change nge memory memory can be, and recent recently ly has been, been, used used in in a wide wide array array of

products, including computers, cell phones, smart phones, and many other consumer and commercial products that require storage of memory. 46.

The 199 1998 8 Agree Agreemen mentt also also refe referen renced ced the electro electronic nic Ovonic Ovonic thresh threshold old thyris thyrister ter--

like power switch (the “Ovonic Switch”). This switch was a device developed by ECD that would switch from a non-conducting “off” state to a highly conductive “on” state with the application of a threshold voltage. 47.

Thee 1998 Th 1998 Agre Agreem emen entt made made expr expres esss refe refere renc ncee to Cha Chalc lcoge ogeni nidede-ba base sed d 1 devices

that, on information and belief, are the critical technology used in Micron’s 3D XPoint Technology (described in paragraph _112_ below). Phase-change memory is chalcogenide based. 48.

Thee 1998 Th 1998 Agre Agreem ement ent rem remai aine ned d in effe effect ct and and has has never never been been term termin inat ated ed..

Defendant Lowrey understood that its terms bound him, including providing a written consent consistent with the First Refusal Right in 2008. The 1999 Agreement

49.

On August August 2, 1999, 1999, ECD, ECD, Lowr Lowrey ey and and Ovony Ovonyx x entere entered d into into that that cert certain ain “Licen “License se

and Assignment Agreement” (the “1999 Agreement”). 50.

The 1999 Agreeme Agreement nt express expressly ly refere referenced nced the 1998 Agreem Agreement ent,, and, and, pursua pursuant nt to to

the terms and conditions of the 1998 Agreement, Ovonyx desired to acquire intellectual property rights from ECD and Lowrey.

1

The term Chalcogenide refers to compounds using u sing elements on the Periodic Table vertically below Oxygen: Sulfur, Selenium, Tellurium, and Polonium.

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51.

Unde Underr the the 1999 1999 Agre Agreem emen ent, t, ECD ECD gran grante ted d to Ovon Ovonyx yx a roya royalty lty-be -bear aring ing,,

worldwide, exclusive right and license to ECD’s “IP” (as defined in the 1998 Agreement). 52.

Lowrey Lowrey assign assigned, ed, without without encumbr encumbrance ance,, to Ovonyx Ovonyx all rights rights,, title title and intere interest st in in

and to Lowrey’s IP. 53.

Lowrey Lowrey benefi benefitte tted d from from enteri entering ng into into the the 1999 Agreem Agreement ent because because he was was a

partial owner of Ovonyx, and Ovonyx would benefit from the transfer of intellectual property from Lowrey and ECD. 54.

Sectio Section n 5 of the 199 1999 9 Agree Agreement ment express expressly ly provid provided ed that that “[a] “[a]ll ll terms terms and

conditions and rights and obligations of the 1998 Agreement remain in full force and effect.” This provision obligated Ovonyx to undertake the obligations of the 1998 Agreement that ECD and Lowrey had intended for the “entity” under the 1998 Agreement to undertake. 55.

Consis Consisten tentt with with the provis provision ion of Sect Section ion 5, ECD ECD prov provide ided d notic noticee to Ovonyx Ovonyx to

pay a quarterly Royalty equal to 0.5% of Ovonyx’s revenues. Ovonyx paid this Royalty for at least a decade. In 2008, Lowrey also provided consent consent to ECD transferring patents to Ovonyx as required under the 1998 Agreement, consistent with the provisions of Section 5 of the 1999 Agreement that incorporated the 1998 Agreement into the 1999 Agreement. 56.

Ovony Ovonyx x attra attracte cted d sever several al inve investo stors rs in additio addition n to to Lowr Lowrey ey and and ECD, ECD, includ including ing

Intel Corporation (“Intel”), which in February 2000 acquired preferred stock issued by Ovonyx. On information and belief, two of the original investors in Micron and a senior Micron employee also acquired equity interests. 57.

ECD ulti ultimat mately ely held held 35.2% 35.2% of the fully fully-di -dilut luted ed share sharess of comm common on stock stock of of

Ovonyx when it filed for bankruptcy on the Petition Date. 58.

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Ovonyx’s Development and Licensing From 1999 to 2011

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59.

After After executi execution on of of the the 1999 Agreem Agreement ent,, Ovony Ovonyx x engage engaged d in in effor efforts ts to deve develop lop

and license the technology it gained from ECD and Lowrey. Over the course of a decade, Ovonyx entered into at least least twelve licensing and/or joint development agreements. Ovonyx received significant license fees through these agreements. Ovonyx also received royalties royalties from several of its counter-parties and fees for providing clean-room and other intellectual property related services. 60.

From From Jun Junee 1999 1999 to May 2012, 2012, Ovony Ovonyx x rece receive ived d over over $58 millio million n in in reven revenues. ues. As

required under the 1999 Agreement, Ovonyx paid to ECD approximately 0.5% of this amount to ECD. 61.

62.

Afte Afterr 1999 1999 and and throug through h 2011, 2011, Ovony Ovonyx x activ actively ely work worked ed on dev devel elop oping ing new new

technologies and writing new patents. 63.

64.

Ovony Ovonyx’s x’s phas phase-c e-chang hangee techno technology logy,, deriv derived ed from from inte intelle llectu ctual al prop property erty license licensed d to

Ovonyx by ECD and contributed to Ovonyx by Lowrey, had substantial potential value. For

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example, in one 2007 presentation Ovonyx prepared for ECD, Ovonyx provided projections that the available market for Ovonyx products in 2009 would be $224 billion, and phase-change memory was well placed to compete with, and even replace, other forms of non-volatile memory devices. 65.

ECD and Ovonyx Ovonyx also also enter entered ed into into a separa separate te licens licensee agree agreement ment in Septemb September er

2002 (the “2002 License Agreement”) concerning, among other things, cognitive computing, and formed Ovonyx Cognitive Computer, Inc. (“OCCI”), which is 95% owned by the Trust and, on information and belief, 5% owned by Ovonyx.

Pursuant to the 2002 License License Agreement,

Ovonyx granted to OCCI certain world-wide licenses to intellectual property owned by Ovonyx. 66.

The 200 2002 2 Lice License nse Agreeme Agreement nt made express express refere reference nce to the 1998 Agreeme Agreement. nt.

The ECD Bankruptcy and Sale of ECD’s Stock in Ovonyx

67.

On the Petiti Petition on Date, Date, ECD commen commenced ced its chapter chapter 11 case. case. Among Among other other assets assets,,

ECD engaged in a marketing marke ting process to sell its stock in Ovonyx. 68.

Micron Micron was selecte selected d as the winning winning bidder bidder..

Pursua Pursuant nt to that that certai certain n Equity Equity

Purchase Agreement dated as of August 3, 2012, Micron acquired all of ECD’s stock in Ovonyx and ECD’s rights under a 2000 stockholder agreement, which agreement was assumed by ECD and assigned to Micron (the “Bankruptcy Sale”). 69.

Micron Micron paid paid $12 millio million. n. This This purcha purchase se price price sug sugges gested ted an equity equity valuati valuation on of

Ovonyx between $31.1 million and $34.0 million. 70.

Micr Micron on did did not take take assi assign gnme ment nt of of eith either er the the 1998 1998 Agr Agreem eemen entt or the the 1999 1999

Agreement. Micron had the opportunity to do so because the first draft of a sale agreement provided by the Trust to Micron for the stock of Ovonyx owned by ECD included the assumption and assignment of each agreement but, on information and belief, Micron declined to take assignment of each.

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71.

This This Cour Courtt cond conducte ucted d a hearing hearing on appr approval oval of the Bankru Bankruptcy ptcy Sale on Augus Augustt 22, 22,

2012. At the hearing, which was attended by counsel representing Micron, ECD provided a proffer of its investment banker, which included a representation that ECD was informed that Micron had not communicated with any other equity security holders of Ovonyx and had not had any dialogue or discussion regarding the sale s ale with Lowrey or Parkinson. 72.

73.

74.

ECD assume assumed d the the 1999 1999 Agre Agreemen ementt purs pursuant uant to a motio motion n file filed d on July 16, 2012

that this Court approved. By virtue of the assumption of the 1999 Agreement, Agreement, Ovonyx remained obligated to pay the Royalty and honor the First Refusal Right. The Post-Sale Activities of Ovonyx and the July 2015 Merger

75.

After After the the sale sale of ECD’ ECD’ss stock stock in Ovony Ovonyx, x, Ovony Ovonyx x contin continued ued to oper operate ate,, receiv receiving ing

licensing and royalty fees. 76.

For at leas leastt a year year after after the the Bank Bankrup ruptcy tcy Sale, Sale, Ovony Ovonyx x contin continued ued to repr represe esent nt in in its its

financial statements that it was obligated to pay the 0.5% Royalty as required under the 1998 Agreement and 1999 Agreement.

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77.

However However,, Ovony Ovonyx x faile failed d to to pay pay any any Royalti Royalties es after after the Bankru Bankruptcy ptcy Sale closed closed..

78. . Ovonyx has not paid 0.5% of this amount to ECD. 79.

On inform informati ation on and and beli belief, ef, Ovonyx Ovonyx has receive received d addit addition ional al reven revenues ues after after May

31, 2015, but has paid nothing to ECD. 80.

81.

82.

On info informa rmatio tion n and belief belief,, Intel Intel never never exerci exercised sed its its firs firstt refus refusal al righ rights ts whic which h

allowed Micron, a competitor, to control much of the critical technology associated with 3D XPoint, or its first offer rights, which allowed OMT to acquire significant rights concerning 3D XPoint for de minimis consideration.

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83.

In July 201 2015, 5, Ovony Ovonyx x and Micron Micron entere entered d into into a merger merger transa transacti ction on purs pursuan uantt to

which Micron would acquire all of the outstanding shares of Ovonyx, pursuant to a document titled Agreement and Plan of Merger (the “Merger Document”).

84.

85.

The D& D&P P Valua Valuatio tion n was was purpor purported tedly ly based based on Micr Micron on manag managemen ement’s t’s belief belief that that

“an 8 year life is a reasonable estimate of the remaining economic life of the acquired license, with the expectation that the % of revenue attributable to the acquired license will start to decline in approximately 3 years.” 86.

On Augu August st 14, 14, 201 2015, 5, only only two two weeks weeks after after the the Mer Merger ger Mark Durcan, the then CEO of Micron, hosted Micron’s 2015 Summer Analyst

Conference. In response to a question from the investment community, Durcan discussed the sales potential of 3D XPoint for Micron stating, “In the 2018 timeframe [Micron’s 3D Point business] could easily be of the same order of magnitude as our DRAM businesses in that timeframe. So maybe not the same size maybe half the size in 2018 but it will be a significant additive revenue stream stream to Micron at the time”. time”.

Whereas Durcan projected 3D XPoint as

potentially as large as DRAM,

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87.

Given Given the size of Micron’ Micron’ss exist existing ing DRAM DRAM busin business ess and the typica typicall Ovony Ovonyx x

license agreement royalty rate,

88.

89.

The Trust, Trust, had it it been been notif notified ied,, could could have exercis exercised ed its its Fir First st Refu Refusal sal Right Right to to

acquire the stock Micron was acquiring at what amounted to a lowball price. 90. 90.

Lowr Lo wrey ey hims himsel elff rece receiv ived ed in exce excess ss of

91.

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92.

93.

On inform informati ation on and belief belief,, Ovony Ovonyx x and and Lowr Lowrey ey made made no eff effort ort to market market the

stock in Ovonyx to any person other than Micron. 94.

Neithe Neitherr Lowr Lowrey ey nor nor Ovonyx Ovonyx provid provided ed noti notice ce to to ECD ECD that that the stock stock of Ovonyx Ovonyx

would be sold. As set forth forth above, under the 1998 Agreement Agreement and the 1999 Agreement, ECD had a First Refusal Right over any an y sales of stock of Ovonyx. The OMT Asset Sale and Transfer Agreement

95.

96.

97.

98.

99.

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100.

Ovony Ovonyx x did not undert undertake ake any analy analysis sis to to determin determinee whether whether the the consider considerati ation on

provided by OMT was fair value for the assets Ovonyx was transferring to OMT.

101.

102.

103.

On info informa rmatio tion n and belie belief, f, OMT OMT is a company company that that has has no oper operati ations ons and and no

employees, but merely holds intellectual property rights. 104.

OMT was was on notic noticee of the exis existenc tencee of at leas leastt the 1998 1998 Agreeme Agreement nt by virtu virtuee of

105.

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106.

107.

The OMT OMT Agreemen Agreementt was not arms-l arms-lengt ength, h, commerc commercial ially ly reasona reasonable ble trans transact action ion

but a sweetheart deal, done in secret. 108.

Neithe Neitherr Ovonyx Ovonyx nor nor Lowrey Lowrey prov provide ided d any notic noticee to ECD that that Ovony Ovonyx x would would be

entering into the OMT Agreement. Thus, ECD was deprived of the right to exercise the First First Refusal Right, and easily could have matched the de minimis consideration that OMT “paid” Ovonyx. 109. Lowrey resigned as an officer and Board member m ember of Ovonyx. 110.

111.

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112.

In July July 2015 2015,, Micron Micron anno announce unced d the deve develop lopment ment of 3D XPoint XPoint,, which which is a

technology for making memory circuits that is being jointly developed by Micron and Intel. This technology permits the vertical stacking of memory elements, which means more memory can be stored in a given area of the surface of a memory circuit. circuit. A representative of IM Flash, an Intel and Micron joint venture, was quoted as stating that the technology’s “magic parts” were Chalcogenide material and an “Ovonyx switch” that, on information and belief, is the Ovonic Switch. 113.

114.

On June June 6, 2018, 2018, the the Trust Trust made made dema demand nd on Ovony Ovonyx x to pay all all owed owed Royalt Royalties ies

and to confirm that Ovonyx will will pay future Royalties. Ovonyx has refused to pay the Royalty.

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CAUSES OF ACTION FIRST CAUSE OF ACTION AGAINST OVONYX AND LOWREY (Breach of Contract)

115.

The Trust repeats repeats and realleg realleges es the foregoing foregoing allegations allegations as though they were

fully set forth here. 116.

The 1999 Agreement Agreement valid and enforceable enforceable contractual contractual relationshi relationship p existe existed d (and (and

still exists) between the Plaintiff (as the successor in interest to ECD), on the one hand, and Ovonyx and Lowrey, on the other hand. 117.

The term termss of the 1998 1998 Agreem Agreement ent are are incorpo incorporat rated ed into into the 1999 1999 Agreem Agreement, ent, and and

ECD, Lowrey, and Ovonyx’s conduct subsequent to execution of the 1999 Agreement confirms the parties’ intention that Ovonyx was obligated under the 1999 Agreement to perform obligations under the 1998 Agreement. 118.

It is is a breach breach of the the 1998 Agree Agreemen mentt if Lowrey Lowrey did did not provi provide de notice notice of of the First First

Refusal Right to ECD or cause Ovonyx to pay the 0.5% Royalty. 119.

It is is a breach breach of the 1999 1999 Agree Agreement ment if if Ovonyx Ovonyx did did not pay pay the Roya Royalty lty or prov provide ide

notice to ECD so that ECD could exercise the First Refusal Right. 120.

ECD assume assumed d the the 1999 1999 Agreem Agreement ent under under 11 11 U.S.C U.S.C.. § 365 365..

121.

Since Since the the consu consumma mmation tion of the the Bankr Bankruptc uptcy y Sale, Sale, Ovony Ovonyx x has not not paid paid any

Royalty. 122.

Neithe Neitherr Lowrey Lowrey nor nor Ovony Ovonyx x provide provided d any notice notice of the the July July 2015 2015 Transac Transactio tions, ns,

including the Merger Merger Document and the the OMT Agreement. Thus, the Trust Trust was denied the opportunity to exercise the First Refusal Right. 123.

Lowrey Lowrey has mate materia rially lly brea breached ched both both the 1998 1998 Agre Agreeme ement nt and and the 1999 1999

Agreement.

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124.

Ovony Ovonyx x has has materi materially ally breache breached d the the 1999 Agreeme Agreement. nt.

125.

As a direct, direct, proximate, proximate, and foresee foreseeable able result result of the breache breaches, s, the the Plainti Plaintiff ff was

damaged in an amount to be awarded at trial. SECOND CAUSE OF ACTION AGAINST MICRON (Alter Ego/Successor Liability)

126.








Royalty. 130.

Ovony Ovonyx x did not provi provide de any notic noticee of the July July 2015 2015 Transa Transacti ctions ons,, includi including ng the the

Merger Document and the OMT Agreement. Agreement. Thus, the Trust was denied the opportunity to exercise the First Refusal Right. 131.


132.

Micron Micron acquire acquired d all all of the stock stock of of Ovony Ovonyx x in July 2015. 2015. By acqu acquiri iring ng such

stock, Micron is liable for the obligations of Ovonyx. Ovon yx. 133.

Micron Micron abus abused ed the corp corpora orate te form form of Ovony Ovonyx x by causing causing Ovony Ovonyx x to enter enter into into the

OMT Agreement and to orchestrate transactions by which Micron and its joint venture partner Intel would receive the benefit of a royalty free license for Ovonyx’s technology relating to 3D XPoint without complying with the 1998 Agreement and 1999 Agreement.

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134.

Micron Micron,, as alter alter ego ego of Ovonyx Ovonyx,, is respo responsi nsible ble for for the the obliga obligatio tions ns of Ovony Ovonyx x

under the 1999 Agreement. THIRD CAUSE OF ACTION AGAINST MICRON (Tortious Interference With Contract)

135.










Royalty. 140.




Agreement. 142.


143.

With With respec respectt to the breach breaches, es, Micr Micron on had actua actuall knowled knowledge ge of the the obligat obligation ionss

owed to ECD under the 1998 Agreement and 1999 Agreement. Among other things, Micron

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could have, but chose not to, take assignment of the 1998 Agreement and 1999 Agreement in connection with its Bankruptcy Sale acquisition of ECD’s stock in Ovonyx. 144.

On inform informati ation on and belie belief, f, Micro Micron n underst understood ood that that acquiri acquiring ng Ovonyx’ Ovonyx’ss stock, stock,

including Lowrey’s shares, without providing the Trust notice to exercise the First Refusal Right would cause a breach of the 1998 Agreement and 1999 Agreement. 145.

Micron Micron acte acted d with an an imprope improperr purpos purposee by ensurin ensuring g that that Ovonyx Ovonyx would would never never

provide notice to the Trust. Micron knew that the effect of the agreement it designed, drafted, and negotiated with Ovonyx would result in a breach of the 1998 Agreement and the 1999 Agreement, and allow Micron to acquire Ovonyx, the phase-change technology and the Ovonic Switch – critical to 3D XPoint. FOURTH CAUSE OF ACTION AGAINST OMT (Tortious Interference)

146.










Royalty.

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151.




Agreement. 153.


154.

With With respec respectt to the breac breaches hes,, based based on existin existing g licens licensee agreeme agreements nts Ovony Ovonyx x had

entered into that were being assigned to OMT, OMT had actual knowledge of the obligations owed to ECD under the 1998 Agreement and 1999 Agreement. 155.

On informatio information n and and belief belief,, OMT OMT underst understood ood that acquiring acquiring Ovonyx’s Ovonyx’s intellectual intellectual

property, without providing the Trust notice to exercise the First Refusal Right, would cause a breach of the 1998 Agreement and 1999 Agreement. 156.

OMT acte acted d with with an impro improper per purp purpose ose by ensur ensuring ing that that Ovony Ovonyx x would would never never

provide notice no tice to the Trust. On information and belief, OMT entered into the OMT Agreement to facilitate Micron’s acquisition of Ovonyx and would acquire rights to intellectual property for consideration that was far below market value. FIFTH CAUSE OF ACTION AGAINST OMT (Actual Fraudulent Transfer) (Michigan Uniform Voidable Transfers Act)

157.



In July July 2015, 2015, Ovony Ovonyx x entered entered into into the the OMT OMT Agreem Agreement ent whic which h constit constitute uted d a

transfer of an interest of Ovonyx in property. propert y.

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159.

The OMT OMT Agreem Agreement ent was was entered entered into into with with the inten intentt to hinder hinder,, delay, delay, or defraud defraud

other creditors of Ovonyx. 160.

Ovony Ovonyx’s x’s intent intent is evidenc evidenced ed by the follow following ing actions actions::

a.

b. Ovonyx intentionally hid the OMT Agreement from the Plaintiff, including for months afterwards even though the Plaintiff had been b een requesting information from Ovonyx; c. No effort effort was was taken taken to evaluate evaluate the the OMT Agreement Agreement or determine determine whether whether consideration OMT was paying for substantially all of Ovonyx’s assets was fair; and d. The transact transaction ion materiall materially y benefitted benefitted Micron, Micron, which which at the the time owned owned in excess excess of 35% of the stock of Ovonyx, had the right to appoint two board members, and was an insider of Ovonyx 161.

The Plaintiff, Plaintiff, as a creditor creditor of of Ovonyx, Ovonyx, was harmed as a result result of Ovonyx Ovonyx entered entered

into the OMT Agreement. 162.

Pursua Pursuant nt to Mich Michiga igan n Unifor Uniform m Voidab Voidable le Trans Transfer ferss Act § 566.31 566.31 et seq., the Trust

is entitled to a judgment (a) avoiding the OMT Agreement; (b) directing that the OMT Agreement be set aside, and (c) recovering any property transferred to OMT under the OMT Agreement. Agreement. [signature page follows]

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PRAYER FOR RELIEF

WHEREFORE, the Trust respectfully requests that this Court enter judgment in favor of the Trust and against the Defendants as follows: a.

awar awardi ding ng com compe pens nsat atory ory damag damages es in amo amount untss to to be dete determ rmin ined ed at at tri trial al,, tog toget ether her with prejudgment interest at the maximum rate allowable by law;

b.

avoiding the OMT Agreement, directing the OMT Agreement be set aside and recovering all property transferred to OMT under the OMT Agreement;

c.

awar awardi ding ng reas reasona onabl blee cost costss and and expe expens nses es incu incurr rred ed in in this this act actio ion, n, inc inclu ludi ding, ng, to the the extent applicable, attorneys’ fees; and

d.

gran granti ting ng such such othe otherr rel relie ieff as as the the Cour Courtt dee deems ms just just and and pro prope per. r.

Dated: July 12, 2018 By:

/s/ Eric D. Winston Eric D. Winston, Esq. (admitted pro hac) Quinn Emanuel Urquhart & Sullivan, LLP 865 S. Figueroa Street 10th Floor Los Angeles, CA 90017 Telephone: (213) 443-3000 Facsimile: (213) 443-3100 Email: [email protected] -and-

By:

/s/ Joseph R. Sgroi Joseph R. Sgroi (P68666) E. Todd Sable (P54956) Robert M. Riley (P72290) Honigman Miller Schwartz and Cohn LLP 2290 First National Building 660 Woodward Avenue Detroit, MI 48226 Telephone: (313) 465-7000 Facsimile: (313) 465-8000 Email: [email protected] [email protected] [email protected] Attorneys for Plaintiff Energy Conversion Devices Liquidation Trust

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