Johnson & Johnson broke its promises to investors in Auris Health, a surgical robotics startup it bought five years ago for $3.4 billion. Now it's got to shell out another $1 billion, based on a ruling yesterday from Delaware Chancery Court.

Why it matters: This appears to be the largest legal reward ever granted in an investor earnout dispute, and could change the way that such provisions are written.

Catch up quick: Auris had raised over $830 million in VC funding, and was concerned during deal negotiations that there could be internal competition for resources with an existing J&J surgical robotics effort called Verb that was championed by then-CEO Alex Gorsky.

• The result was specific language around $2.35 billion in prospective earnouts, tied to both FDA approval and sales, whereby J&J was essentially required to provide Auris with the time and resources to meet its milestones.
• J&J also was not allowed to even consider earnout payment obligations when making strategic decisions.
• Auris shareholders, which included Wellington Management and Lux Capital, would later sue for fraud — arguing that J&J took actions that made the milestones impossible to achieve, in violation of its contract.

The ruling: "J&J's promise to Auris was broken almost immediately after closing," Vice Chancellor Lori Will wrote in her 144-page ruling, adding that Auris "effectively became a parts shop for Verb."

• For example, J&J launched an internal bakeoff between the two platforms, rather than let them be developed in parallel.
• The Auris system won out, but J&J insisted that that Verb hardware and staffers be incorporated. The entire process caused delays and other complications that helped put the milestones out of reach.
• J&J then canceled the earnouts entirely, creating new employee incentives, after claiming that the Auris system would need to achieve FDA approval via a different regulatory pathway than was included in the merger agreement.
• The judge eviscerated all of J&J's defenses, ruling that they misstated the actual merger agreement and were "concocted" after being sued.

Look ahead: J&J says it disagrees with the ruling and is considering an appeal.

• But an appeal is likely to spark a cross-appeal from the plaintiffs, who would like a crack at getting even more of their earnout.
• Gorsky, who features prominently in the ruling and is now a partner with Iconiq Growth, didn't return an email request for comment.

The bottom line: This ruling could provide a roadmap for VCs writing future earnout agreements, particularly in biotech where they're prevalent. Namely by including specific obligations that constrain what the buyer can do.

Safe Superintelligence, an AI startup with offices in Silicon Valley and Israel, has raised over $1 billion in first-round funding.

Why it's the BFD: The pedigree of the co-founders, including former OpenAI chief scientist Ilya Sutskever, fellow OpenAI vet Daniel Levy, and former Apple AI chief Daniel Gross.

• Gross will serve as CEO, and also invested via the NFDG partnership he runs with Nat Friedman.

Details: It's all in cash rather than in cloud credits, even though lots of the money will be used for compute power. And yes, it's an astronomical amount of money for what at the moment appears to be three guys in a garage.

• Investors beyond NFDG include Andreessen Horowitz, DST Global, Sequoia Capital, and SV Angel.

What they're saying: "We have started the world's first straight-shot SSI lab, with one goal and one product: a safe superintelligence. ... Our singular focus means no distraction by management overhead or product cycles, and our business model means safety, security, and progress are all insulated from short-term commercial pressures."

The bottom line: SSI's mission statement is a pretty blunt rebuke of OpenAI, even if many of its investors have stakes in both.

• Cortex, an SF-based productivity platform for engineers, raised $60m in Series C funding. Scale Venture Partners led, and was joined by Sequoia Capital and YC. axios.link/47fL2NC

• Oyster, a payroll and HR platform for distributed workforces, raised $59m in Series D funding led by Silver Lake Waterman at a $1.2b valuation. axios.link/47gaC53

• Laravel, a Benton Ark.-based PHP web application framework, raised $57m in Series A funding from Accel, per Fortune. axios.link/4ggAYbs

🚑 Thatch, an SF-based ICHRA health benefits startup, raised $38m in Series A funding co-led by Index Ventures and General Catalyst, per Axios Pro. axios.link/3ZvVn6r

• Cobre, a Colombian real-time payments infrastructure startup, raised $35m in Series B funding led by Oak HC/FT, per Axios Pro. axios.link/3zaitVh

🌎 Mantel Capture, a Cambridge, Mass., carbon capture startup that uses molten borates, raised $30m in Series A funding. Shell Ventures and Eni Next co-led, and were joined by Engine Ventures, New Climate Ventures, Hartree, bp Ventures, Arosa Ventures, Vale Ventures, Newlab, and MCJ Collective. axios.link/3Xv74bV

• Unlock Technologies, a Tempe, Ariz., home equity agreement provider, raised $30m in Series B funding from D2 Asset Management, Saluda Grade, Second Century Ventures, and Reach. It also secured a $250m capital commitment from D2 for origination. axios.link/47infga

• ITC Federal, an Arlington, Va., provider of IT solutions and enterprise services to U.S. federal agencies, raised $25m from Blue Delta Capital Partners. axios.link/3z7EfZF

• Malaa, a Saudi wealth management platform, raised $17.3m in Series A funding led by SNB Capital. axios.link/3ZbLeeX

🌎 Switch Bioworks, a San Carlos, Calif., developer of sustainable fertilizers, raised $17m in seed funding, per Axios Pro. Change Forces Capital led, and was joined by Grantham Foundation, Astanor Ventures, Acre Venture Partners, Anthos Capital, Thia Ventures, Emerson Collective, and Ag Ventures Alliance. axios.link/4cSnYWw

🚀 Atlas Space Operations, a Traverse City, Mich., provider of ground station services for satellite communications, raised $15m led by NewSpace Capital. axios.link/4dHkzeh

🌎 Carbyon, a Dutch direct air capture startup, raised €15.3m in Series A funding from Siemens Financial Services, Omnes Capital, Global Cleantech Capital, Invest-NL, Innovation Industries, Lowercarbon Capital, and the Brabant Development Agency. axios.link/4eb7qKs

• Ume, a Brazilian payments startup, raised $15m in Series A funding. PayPal Ventures led, and was joined by NFX, Globo Ventures, and Clocktower Ventures. axios.link/3B00Urj

⚡ Reonic, a German provider of digital tools for renewable energy installers, raised €13m in Series A funding. Northzone led, and was joined by insiders Point Nine and Puzzle Ventures. axios.link/3ASzm7l

• Drip, a creator engagement platform built on Solana, raised $8m in seed funding. NFX led, and was joined by Progression and Coinbase Ventures. drip.haus

• AltScore, a provider of tools for Latin American lenders, raised $8.5m in Series A funding. Haymaker Ventures led, and was joined by insiders Kamay Ventures, BuenTrip Ventures, Caffeinated Capital, FarOut Ventures, and TechStars. altscore.ai

• Reduced, a Danish maker of ingredients from upcycled foods, raised €8m in Series A funding from such backers as the European Circular Bioeconomy Fund. axios.link/3MEma8B

• DubClub, a community marketplace for sports content, raised $7.5m in Series A funding led by Renegade Partners. dubclub.win

• Daisy, a Costa Mesa, Calif., home tech installation and services startup, raised $7m in Series B funding co-led by Goldcrest and Bungalow. daisyco.com

• Portex, an SF-based freight procurement platform, raised $6.25m in seed funding led by Footwork Ventures, with participation by Cowboy Ventures, and Base 10. axios.link/3Zecl9g

• Skarper, a British developer of e-bike conversion devices, raised €5.3m. Adjuvo led, and was joined by Starry Group and Mobilitech Capital. axios.link/3z8NeKe

• Cowboy, a Brussels-based e-bike maker, raised €4m in equity from insiders Index Ventures, Hardware Club, Future Positive Capital, Isomer, and Exor. axios.link/3ZcBT6j

🚑 ZipBio, a Seattle-based generative AI platform for gene and protein compression, raised $4m in seed funding. NFX led, and was joined by MoreVC. ziptx.bio

• Blitzy, a Cambridge, Mass., startup focused on automating custom software development, raised $4.4m from Link Ventures, Bessemer, Flybridge, NFX, Picus, and Asymmetric. blitzy.com

• Trestle, a provider of performance and analytics software for heavy construction, raised $2.3m in seed funding. Lerer Hippeau led, and was joined by MetaProp, Laconia Capital, Alumni Ventures, The LegalTech Fund, Redbud VC, and Meridian Ventures. gotrestle.com

• Steerlab, a French sales workflow automation startup, raised €1.7m in pre-seed funding led by Dreamcraft VC, with participation from Heartfelt and Lumière AI Ventures. axios.link/4dPgKDI

🚑 Bansk Group acquired Foundation Wellness, a Wadsworth, Ohio-based maker of orthotics products, from Gridiron Capital. axios.link/3ZcJDW5

• BDG, the owner of Bustle, Nylon and other women-focused media brands, raised an undisclosed amount of growth funding from Medici Capital Partners, per Axios. axios.link/3XaMJr3

🚑 Birch Hill Equity Partners agreed to buy the Rexall and Well.ca pharmacy businesses from McKesson (NYSE: MCK). axios.link/3TgJ89K

🚑 EQT is in advanced talks to buy GeBBS Healthcare Solutions, an LA-based provider of health-care BPO services, from ChrysCapital, per the Economic Times. axios.link/4eun3gf

• GTCR completed its $2.7b take-private buyout of AssetMark (NYSE: AMK), a wealth management technology platform for financial advisors. axios.link/3w893YR

• Hg acquired Ncontracts, a Brentwood, Tenn., provider of risk and vendor management solutions, from Gryphon Investors.

• Ncontracts also acquired Venminder, an Elizabethtown, Ky.-based provider of third-party risk management for financial services that had raised over $55m from firms like Silversmith Capital Partners, Bain Capital Ventures, and MissionOG. axios.link/4dQQZTD

• Mainsail Partners invested $63m into MirrorWeb, a British provider of compliance and preservation software provider. Sellers include Maven Capital Partners. axios.link/3TiG5xQ

• Muck Rack, a Miami-based PR management platform backed by Susquehanna Growth Equity, acquired Keyhole, a Toronto-based social listening and analytics platform. muckrack.com

🚑 MyndYou, a New York provider of conversational AI solutions for healthcare, raised funding from WindRose Health Investors. myndyou.com

• Rotunda Capital Partners acquired Lehman Pipe and Supply, a Miami distributor of industrial pipe, valves and fittings. lehmanpipe.com

• SCF Partners acquired DeltaValve & TapcoEnpro, both providers of sever service industrial valves, from KKR portfolio company CIRCOR International. deltavalve.com

• Tower Arch Capital acquired ACS Manufacturing, a Denison, Texas, maker of structural enclosures for backup power systems. acsmanufacturing.com

• Ripple CEO Brad Garlinghouse said his company has no interest in a U.S. IPO, due to what he believes is SEC hostility toward crypto. axios.link/3Xvbfod

🚑 Affinity Equity Partners agreed to sell Malaysia's Island Hospital for $898m to IHH Healthcare. axios.link/4cR6ERz

🚑 GTCR and Golden Gate Capital are seeking to sell Antylia Scientific, a Vernon Hills, Ill.-based lab equipment supplier that could fetch more than $2b, per the FT. axios.link/3ziqCH7

• Paylocity (Nasdaq: PCTY) is paying $325m to acquire Airbase, an SF-based spend management platform for SMBs that raised $90m (including at a $600m valuation) from Menlo Ventures, Craft Ventures, Bain Capital Ventures, First Round Capital, Quiet Capital, Webb Investment Network, and BoxGroup. axios.link/4g9UoP1

• Tarabut, a UAE-based open banking startup, acquired British real-time account-to-account payments platform Vyne. Tarabut has raised $32m in VC funding, while Vyne had raised over $18m from firms like Entrée Capital and Hearst Ventures. axios.link/4cObJdz

• Verizon (NYSE: VZ) agreed to buy rival telecom company Frontier Communications (Nasdaq: FYBR) for $20 billion in cash, or $38.50 per share. axios.link/4ef4BYN

• 7-Eleven owner Seven & i (Tokyo: 3382) will tell Alimentation Couche-Tard (TSX: ATD), the Canadian owner of Circle K convenience stores, that its preliminary takeover bid is too low, per Bloomberg.

• Axway (Paris: AXW) completed its €330m acquisition of Sopra Steria's (Paris: SOP) banking software unit. axios.link/3z76Mi4

• Bank of New York Mellon (NYSE: BK) agreed to buy Archer, a Berwyn, Pa., provider of managed account solutions to asset and wealth managers. archerims.com

• ConnectOne Bancorp (Nasdaq: CNOB) agreed to buy rival lender First of Long Island (Nasdaq: FLIC) for $284m in stock. axios.link/4cUbi1j

• Informa (LSE INF) acquired creator conference organizer VidCon from Paramount Global (Nasdaq: PARA). axios.link/3Xey7XD

🚑 Medera, an Irvine, Calif., developer of cardiovascular drugs, agreed to go public at an implied $623m valuation via a merger with Keen Vision Acquisition Corp., a SPAC originally formed by Keen Vision Capital to focus on ESG deals. axios.link/4cSQI1o

⚡ Targa Resources (NYSE: TRGP), a Houston gas pipeline operator with a $32b market cap, rejected an informal takeover approach from Williams Cos. (NYSE: WMB), per Bloomberg. axios.link/4ebXr7q

• Topgolf Callaway Brands (NYSE: MODG) said it will spin off its Topgolf driving range chain. axios.link/3TffJws

• Asylum Ventures, a pre-seed and seed firm led by Nick Chirls (ex-Notation Capital), raised $55m for its debut fund. axios.link/4dWbn5R

• Halo Capital, a new crypto VC firm led by ex-10T principals Daniel Howard and Bhavin Vaid, raised $25m. halo.xyz

• Mayfield is allocating $100m of its latest fund to an "AI garage" initiative. axios.link/3Tfqtem

• Park Square Capital of London raised €3.4b for a European direct lending fund. axios.link/4edWpbk

• Slauson & Co., an LA-based VC firm focused on "economic inclusion," raised $100m for its second fund. axios.link/3TeoaIo

• Warburg Pincus raised over $4b for a structured transactions fund. warburgpincus.com

• AE Industrial Partners promoted Jon Lusczakoski to principal. axios.link/4dNe0GZ

• Mark Carpenter joined Blue Wolf Capital Partners as an operating partner focused on industrials. He previously was president and CEO of Dayton Superior Corp. axios.link/4dW892f

• Kelly Cheng joined Race Capital as a partner and CFO. She previously was CFO at Standard Crypto and Sequoia Heritage. axios.link/4g9XQsX

• Peyman Dadgar is leaving Citigroup to join Deutsche Bank as head of EMEA TMT banking, per Bloomberg. axios.link/3APVVcN

• HGGC promoted Victor Rudo to principal. axios.link/3z9kKjr

• Garnett Station Partners promoted Chris Kozina to head of value creation. axios.link/4gfyMku

• Alex McNutt, former CEO of Pirtek Europe Group, joined Halifax Group as an operating executive. axios.link/4grsMoT

• Vestar Capital Partners promoted Caroline Ptacek to VP. axios.link/3Xgavlh

• TJ Williams, founder of Tamarack Growth Advisory, joined Brighton Park Capital as an operating partner. axios.link/4cVDCR1

President Biden is likely to block Japan's Nippon Steel from buying Pittsburgh-based U.S. Steel for $14.9 billion, citing national security concerns.

• A formal announcement could come before the weekend.

The intrigue: If Biden pulls the trigger, three big questions emerge:

1. Will U.S. Steel make good on its threat to shut Pennsylvania factories?
2. Will U.S. Steel reconsider an earlier takeover bid from Cleveland Cliffs, which it feared would spark a DOJ antitrust investigation? Perhaps both sides wait for the result of November's presidential election.
3. How will Japan react? It's a strong U.S. ally, and one that has many major companies in the M&A crosshairs of American companies and investment firms. Already it's expressing annoyance.