Defendant's Attorney: San Diego, California commercial litigation lawyers represented the Defendant.

Description: San Diego, California commercial litigation lawyers represented the Plaintiffs who sued the Defendants on breach of contract theories.

Plaintiff Dr. Gopinath, cofounded Palamedrix, Inc. (“Palamedrix”) and served as Chief Technology Officer for the company. (Compl. [Doc. 12] ¶¶ 17, 19.) In 2021, the Defendant in this case, SomaLogic, Inc. (“SomaLogic”), approached Palamedrix to discuss a potential merger. (Id. ¶¶ 18, 22.) After about one year of negotiations, SomaLogic and Palamedrix entered into a merger agreement on July 25, 2022 (“Merger Agreement”). (Id. ¶ 25.)

Under the Merger Agreement, SomaLogic agreed to pay $35 million upon closing of the merger, comprising $14 million cash (“Upfront Cash Consideration”) and $21 million in SomaLogic common stock (“Upfront Stock Consideration”). (Id. ¶ 26.) The Upfront Stock Consideration was divided between Dr. Gopinath and Palamedrix’s other Founders. (Id.) SomaLogic also agreed to pay up to an additional $17.5 million in “Milestone Consideration” to the Founders if SomaLogic achieved certain revenue-based milestones by 2027 and 2028. (Id. ¶ 33.) Under the Merger Agreement, a Founder is not eligible to receive this additional consideration unless the Founder “remains a full-time employee” with SomaLogic when the milestones are achieved. (Id. ¶ 34.)

In connection with the Merger Agreement, SomaLogic provided Dr. Gopinath with a Founder Side Letter Agreement, dated July 25, 2022 (“Founder Side Letter”). (Id. ¶ 27.) Under the Founder Side Letter, Dr. Gopinath’s Upfront Stock Consideration was “fully vested ‘subject to the risk of forfeiture[.]’” (Id. ¶¶ 27–29.) The Founder Side Letter provides that Dr. Gopinath would automatically forfeit certain percentages of the Upfront Stock Consideration if he left SomaLogic before the 12- month, 24-month, or 36-month anniversaries of the merger’s closing. (Id. ¶ 28.) But if Dr. Gopinath resigned for “Good Reason” (or was terminated without “Cause”), then his Upfront Stock Consideration would “no longer be subject to forfeiture.” (Id. ¶ 29.) The Merger Agreement defines “Good Reason” to include “a material, adverse change in [a] Founder’s title, authority, duties or responsibilities.” (Id. ¶ 30.)

Outcome: Settled for an undisclosed sum and dismissed with prejudice.

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