Fortis Advisors, LLC v. Krafton, Inc.

• Court: Court of Chancery of Delaware
• Decided: March 16, 2026
• Docket: 2025-0805-LWW
• Status: Published

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

FORTIS ADVISORS, LLC, a Delaware limited liability company, as the Representative of the former shareholders of Unknown Worlds Entertainment,

Plaintiff,

v. C.A. No. 2025-0805-LWW

KRAFTON, INC.,

Defendant.

OPINION

Date Submitted: January 9, 2026 Date Decided: March 16, 2026

Brian C. Ralston, Nicholas D. Mozal, Ryan M. Crowley, & Megan A. Minnich, POTTER ANDERSON & CORROON LLP, Wilmington, Delaware; John Stokes, Kenneth J. Halpern, & Peter Brody, STRIS & MAHER LLP, Cerritos, California; Dmitry Slavin & Jacqueline Sahlberg, STRIS & MAHER LLP, Washington, DC; Attorneys for Plaintiff Fortis Advisors, LLC

Rudolf Koch, Matthew W. Murphy, Nicole Henry, & Sandy Xu, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Atif Khawaja, John P. Del Monaco, Haley S. Stern, & Madeleine M. Xu, KIRKLAND & ELLIS LLP, New York, New York; Madelyn A. Morris & Christopher Stackhouse, KIRKLAND & ELLIS LLP, Chicago, Illinois; Kristin Rose, KIRKLAND & ELLIS LLP, Los Angeles, California; Attorneys for Defendant Krafton, Inc.

WILL, Vice Chancellor Unknown Worlds Entertainment is a video game studio best known for

Subnautica—an underwater survival adventure. Eager to capture its creative magic,

South Korean gaming conglomerate Krafton Inc. acquired Unknown Worlds in 2021

for $500 million upfront plus up to $250 million in contingent earnout payments.

To secure the deal, Krafton contractually guaranteed that Unknown Worlds’

founders—Charlie Cleveland and Max McGuire—along with CEO Ted Gill, would

retain operational control and could only be fired for cause.

As Unknown Worlds prepared to release its hotly anticipated sequel,

Subnautica 2, the parties’ relationship fractured. Internal projections showed the

new title generating significant revenue that would easily trigger the earnout.

Fearing he had agreed to a “pushover” contract, Krafton’s CEO consulted an

artificial intelligence chatbot to contrive a corporate “takeover” strategy.

A campaign to seize control of the studio followed. Krafton locked Unknown

Worlds out of its own publishing platform to prevent the release of Subnautica 2. It

unilaterally posted critical messages on Unknown Worlds’ website. And it abruptly

terminated Cleveland, McGuire, and Gill from their leadership positions, citing a

single reason: a purported lack of game readiness.

After Fortis Advisors LLC sued on behalf of Unknown Worlds’ former

stockholders, Krafton changed tactics. It dropped its argument that the executives

were fired for seeking to prematurely release Subnautica 2. Instead, it claimed

1 Cleveland and McGuire had secretly entered semi-retirement and that all three

leaders had executed massive downloads of company data.

In the first phase of this bifurcated lawsuit, Fortis asks me to determine

whether Krafton breached the transaction agreement by firing Cleveland, McGuire,

and Gill, and usurping their operational control. Fortis proved its claims after an

expedited trial. Krafton’s newly manufactured justifications for the terminations are

pretextual. Cleveland and McGuire had taken on limited roles, but that was long

known to and accepted by Krafton. As for the data downloads, the former employees

were acting to protect the studio’s work product amid Krafton’s takeover attempt.

They kept the data confidential and promptly returned it.

To remedy these breaches, Gill is reinstated as CEO of Unknown Worlds with

full operational authority over the studio. Because restoring him vindicates the

sellers’ operational rights, I decline to return Cleveland and McGuire to the

peripheral roles they occupied before their terminations. Gill—with his authority

restored—may proceed with the early access release of Subnautica 2 when he deems

it appropriate.

To ensure this specific performance remedy is not illusory, the base earnout

period is equitably extended by the duration of Gill’s ouster. Whether Krafton’s

actions wrongfully impaired the earnout, and whether any resulting money damages

are owed, are reserved for the second phase of this litigation.

2 I. BACKGROUND

The following facts were stipulated to by the parties or proven by a

preponderance of the evidence at trial.1

A. Unknown Worlds’ Creation

Charles (Charlie) Cleveland is a “creative vision[ary]” whose life has been

defined by a passion for gaming.2 After a childhood engrossed in video, board, and

role-playing games, Cleveland discovered his calling while studying computer

engineering in college. Rather than pursue a traditional career path, he spent a

summer “lock[ing] [him]sel[f]” in a rented house in Vermont, emerging only when

he and his friends had built a playable game.3 He was “hooked.”4 Cleveland

leveraged the game he built over the summer to land his first job at a game company

in Boston.5

1 Stipulated and Am. Pre-trial Order (Dkt. 132) (“PTO”). Trial occurred over three days, during which six fact and two expert witnesses testified live. The trial record includes 1,538 joint exhibits, including 17 deposition transcripts. Trial testimony is cited as “[Name] Tr.” See Nov. 17-19, 2025 Trial Tr. (Dkts. 151-53). Exhibits are cited by the numbers provided on the parties’ joint exhibit list as “JX __,” unless otherwise defined, and pin cites are to the joint exhibit pagination. See Trial Ex. List (Dkt. 131). Deposition transcripts are cited as “[Name] Dep.” See Notice of Lodging of Deps. (Dkt. 139). 2 Cleveland Tr. 692. 3 Id. at 685. 4 Id. 5 Id. 3 Cleveland’s next spark of inspiration came in 2000, when he played a video

game called Counter-Strike. 6 Counter-Strike was a “revolution” to Cleveland

because it was a user-made modification (or “mod”) built atop an existing game. 7

He spent the next 18 months developing his own mod called Natural Selection.8

In creating Natural Selection, Cleveland pioneered an “early access”

development process that would become his “secret sauce.”9 The early access model

created a “symbiotic relationship” between the developer and players.10 Players

would collaborate with the project, giving them a sense of “ownership” over and

enthusiasm for it.11 Cleveland, in turn, gained immediate feedback on whether

features were “landing,” allowing him to “iterate” until the game was “truly

special.”12

The process worked, and Natural Selection was “successful enough” that

Cleveland realized he could “do this for a job.” 13 He formed Unknown Worlds

6 Id. at 685-86. 7 Id. at 686. 8 Id. 9 Id. at 687-88; Gill Tr. 16. 10 Cleveland Tr. 689; Gill Tr. 13. 11 Cleveland Tr. 689. 12 Id.; Gill Tr. 13. 13 Cleveland Tr. 686. 4 Entertainment in 2001 as a California corporation.14 Cleveland moved to San

Francisco to seek investors for the nascent company. 15

B. The “Magical Pair”

Soon after Cleveland went West, he was joined by his friend Adam (Max)

McGuire (with Cleveland, the “Founders”).16 The two had met in the early aughts

while McGuire was working at a video game studio and Cleveland was creating

Natural Selection.17 McGuire saw Natural Selection’s promise and spent his nights

and weekends developing the mod with Cleveland.18 After Natural Selection

launched, Cleveland and McGuire began to brainstorm on a commercial sequel, and

McGuire joined Unknown Worlds as a co-founder.19

To sell Natural Selection 2 commercially, Cleveland and McGuire could not

rely on an existing game. Rather, they had to “wr[i]te [their] own engine” from

scratch.20 This technical challenge revealed that they were a “magical pair” with a

14 Id. at 686; see PTO ¶¶ 17, 19. 15 Cleveland Tr. 686. 16 Id. at 686-87; see PTO ¶ 21. 17 McGuire Tr. 228; see also Cleveland Tr. 686. 18 McGuire Tr. 228-29. 19 Id. at 229. 20 Cleveland Tr. 690. A mod cannot be sold commercially because it “require[s] another game to play it.” Id. 5 complementary dynamic.21 Cleveland “was the creative side” who “design[ed] the

game,” and McGuire “was the technical side” who “implement[ed] . . . the code.”22

Their combined talents enabled the small studio to employ complex, in-house

technologies rarely seen among independent developers.

C. Subnautica’s Origin

Natural Selection 2 was released by Unknown Worlds via early access in

October 2012.23 Like its predecessor, it was a first-person shooter game.24 Two

months later, national tragedy struck with the Sandy Hook Elementary School

shooting. Cleveland was deeply affected and challenged himself to “make a game

without guns.”25

The result was Subnautica. Cleveland conceived of an underwater survival

exploration game set on an alien planet.26 Working with a colleague while McGuire

refined a different game, Cleveland built a prototype in just two weeks. 27 The

21 Park Tr. 483-84 (describing the “magical pair [as] the key success factor for the company,” where Cleveland provides the “creative vision and [McGuire] is the genius engineer who helps him realize it”); see also Kim Tr. 389-90 (describing Cleveland and McGuire as “two wheels being driven together”). 22 McGuire Tr. 229-30. 23 PTO ¶ 22. 24 Id. ¶ 20; Cleveland Tr. 690-91. 25 Cleveland Tr. 691. 26 Id.; see Gill Tr. 18. 27 Cleveland Tr. 690-91; McGuire Tr. 230-31. 6 Unknown Worlds team recognized the promise in the rough concept and eventually

made bringing it to life the studio’s primary focus.28

Developing the game took great attention to detail. McGuire synthesized into

code research on sunlight absorption in the deep ocean, building a realistic custom

lighting system. 29 Meanwhile, Cleveland spent countless hours creating an

ecosystem populated by creatures and plants that interacted with the player’s

flashlight.30 Through Cleveland’s vision and McGuire’s technical prowess, the game

became a stunning, immersive experience. Players were transported to a vibrant

alien ocean teeming with life, from bioluminescent flora to colossal sea creatures—

a place where light filtered through water to reveal a world that felt startlingly real.31

D. Early Access and Launch

Consistent with Unknown Worlds’ commitment to collaborative development,

Subnautica was released in early access in late 2014.32 Players crash-landed on an

alien ocean planet and had to scavenge for resources while uncovering a “mysterious

28 Cleveland Tr. 691; McGuire Tr. 232. 29 McGuire Tr. 233-34 (discussing researching papers from the Oceanographic Institute about the effect of phytoplankton on sunlight absorption in the deep ocean, and his analysis of visual effects in film); see PTO ¶ 27. 30 PTO ¶ 28; see also id. ¶ 29 (describing Cleveland’s initial direction of Subnautica, involving “a process of constant judgment and discussion and evolution”). 31 Gill Tr. 18; see also JX 218 at 13 (describing the game’s “diverse underwater world” that is “teeming with wildlife and mysteries”). 32 McGuire Tr. 236; PTO ¶¶ 30-31; see also Gill Tr. 10 (“Subnautica . . . became kind of a wonderful example for the entire industry about how to do early access.”); JX 1095 at 14. 7 . . . sci-fi [tale].”33 The project remained in early access for four years, during which

the Unknown Worlds team incorporated player feedback to improve the

experience.34

Unknown Worlds globally released the full version of Subnautica in 2018.35

The game was a massive critical and commercial phenomenon.36 It remains the

studio’s “evergreen IP” and continues to drive significant revenue years after its

release.37

E. Leveling Up

As the studio expanded, the administrative load on the Founders grew.

Cleveland recognized that managing both the business and creative side of Unknown

Worlds was unsustainable. To divide these responsibilities, Edward (Ted) Gill was

hired as Unknown Worlds’ President in December 2018.38

Gill’s history with the studio reached back a decade earlier, beginning when

he rented office space “a couple [of] doors down” from Unknown Worlds in San

Francisco.39 A “lifelong video game fan,” Gill “knocked on the door” to introduce

33 Gill Tr. 18; see PTO ¶ 25. 34 PTO ¶¶ 31, 33; JX 1095 at 14. 35 PTO ¶ 33. 36 Cleveland Tr. 691-93; Gill Tr. 10; JX 1095 at 14; Park Tr. 514; see PTO ¶ 34. 37 Gill Tr. 24. 38 Gill Tr. 6-7; PTO ¶ 32; Cleveland Tr. 687. 39 Gill Tr. 6-7. 8 himself and became fast friends with Cleveland and McGuire. 40 Gill also became

an ardent fan of the studio’s work.41 When he reached a “fork in the road” in his

career years later, he “enthusiastically accepted” the Founders’ offer to join the

team.42

Gill’s arrival marked a maturation of the studio. He took over the “operational

tasks and the management of the studio,” handling finance, strategy, and

partnerships. 43 This structure transformed the “magical pair” into a formidable trio.

With Gill managing the business and Cleveland and McGuire making the games,

Unknown Worlds went from an indie developer to a sophisticated, multi-project

organization. 44

F. Dual Tracks

Although Subnautica was a breakout hit, the Founders were not content for

Unknown Worlds to be defined by a single franchise. They recognized the value in

40 Id. 41 Id. at 14, 18 (describing Subnautica as a “special” game with a “unique” story); PTO ¶ 32. 42 Gill Tr. 7. 43 Id. at 218; see id. at 57 (explaining that “studio operations were 100 percent [his] responsibility”); see PTO ¶ 32. 44 Cleveland Tr. 687 (“I felt like the company could grow and do a lot better if we had someone dedicated to the business itself.”); see also Gill Tr. 11, 25. 9 sustaining their existing community while continuing to take creative risks. This

objective led to the pursuit of a dual-track strategy.

The studio began developing Subnautica: Below Zero—a standalone

expansion to the flagship title.45 Cleveland and McGuire did not lead the effort.

Instead, they entrusted the sequel to a team led by “industry veteran” David Kalina,

which allowed them to focus on an ambitious new project called Moonbreaker.46

Moonbreaker was a digital miniatures game designed to capture the feel of

tabletop strategy games Cleveland and McGuire loved as children. 47 This passion

project demanded the Founders’ full attention. Though Cleveland coached Kalina,

he “didn’t design anything on Below Zero” and “didn’t work on Below Zero at all,”

concentrating exclusively on Moonbreaker.48 McGuire similarly served only as a

high-level resource on Below Zero while he architected Moonbreaker.49 This

division of labor established an institutional approach where the Founders created

new IP, and trusted team members managed the established franchise.50

45 See Gill Dep. 36 (describing Below Zero as an “expandalone” or “mini sequel” to Subnautica). 46 Gill Tr. 25; Cleveland Tr. 694, 699. 47 See Gill Tr. 21; see also Cleveland Tr. 696. 48 Cleveland Tr. 693-94; see also id. at 699 (testifying he worked “full time on Moonbreaker . . . [which] required all [his] attention” (emphasis added)). 49 McGuire Tr. 236, 239; see also Gill Tr. 16 (noting McGuire was not the tech lead on Below Zero); JX 1034. 50 See Gill Tr. 11. 10 While the Founders prototyped Moonbreaker, Below Zero entered early

access in January 2019.51 In its initial form, Below Zero had a “[l]imited world” and

“limited mechanics.”52 But the Below Zero team used player feedback to transform

the game. They expanded the story line with unique biomes, vehicles, and creatures

before the game’s official release in May 2021.53

The finished project was another success. Below Zero boosted sales of the

original Subnautica game and proved Unknown Worlds’ capability as a multi-game

studio.54 Today, the Subnautica franchise has sold over 17.5 million copies and

exceeded $300 million in gross revenue.55

G. The Sale Process

Unknown Worlds grew to 43 employees across nine countries.56 The

Founders, hoping to expand the studio’s international reach, sought to bring in

“additional capabilities”—particularly in marketing.57 To do so, they contacted

several large video game publishers to solicit a strategic minority investment. 58 They

51 PTO ¶ 35; JX 1095 at 14. 52 JX 1179 at 21. 53 PTO ¶ 36; JX 1179 at 21. 54 PTO ¶ 37; Gill Tr. 11 (“This is kind of the history of hit game after hit game.”). 55 PTO ¶ 38. 56 JX 218 at 23. 57 Gill Tr. 27. 58 Id. at 28; Cleveland Tr. 694-95. 11 were met with enthusiasm from over 30 companies, many of which expressed

interest in a full acquisition.59

Because Unknown Worlds was financially stable, the Founders did not “have

to sell.”60 This leverage allowed them to weigh the options that would best secure

the studio’s long-term future. They narrowed the field to nine candidates, and then

to three finalists.61

Price was never the overriding consideration. As the Founders told potential

acquirers, they were looking for a partner who respected the studio’s “community-

based development” model.62 Above all, they hoped to maintain a degree of

operational independence that would allow them to continue making games “on

[their] own terms.”63

Krafton, a South Korean video game publisher, emerged as the top choice.64

Krafton was best known for PUBG: Battlegrounds, a battle royale game that had

generated hundreds of millions in revenue.65 It was seeking to expand its portfolio

59 Gill Tr. 28. 60 Cleveland Tr. 698-99; Gill Tr. 29-30. 61 Gill Tr. 29. 62 Id.; see also McGuire Tr. 237; Cleveland Tr. 698; JX 218 at 3. 63 Cleveland Tr. 698. 64 Gill Tr. 30. 65 PTO ¶ 16; see PUBG: Battlegrounds, PUBG, http://pubg.com/en/main (last visited Jan. 26, 2026); Gill Tr. 126; Kim Tr. 382-83. 12 and “excited about [Unknown Worlds’] development methodology and early access”

model.66

The parties’ perceived fit crystalized in a meeting between Cleveland and

Krafton’s Chief Executive Officer, Changhan (CH) Kim. Cleveland told Kim that

he did not “think it’s possible for [him] to stop making games” and that he “want[ed]

to do this forever.” 67 In response, Kim assured the Founders that Krafton would

preserve the studio’s creative autonomy and long-term vision.68 Krafton offered

Unknown Worlds a “menu” of superior resources that it could opt into at the

Founders’ election.69

H. The Equity Purchase Agreement

On October 29, 2021, Krafton and Unknown Worlds entered into an Equity

Purchase Agreement (“EPA”). 70 Krafton purchased 100% of Unknown Worlds’

outstanding equity for a $500 million upfront payment.71 Cleveland, McGuire, and

66 Gill Tr. 30. 67 Cleveland Tr. 766-67; Kim Tr. 389-92. 68 Kim Tr. 392-93; Gill Tr. 31-32; see also Cleveland Tr. 695-97. 69 Gill Tr. 31. 70 PTO ¶ 46; JX 241; JX 242 (“EPA”). The EPA is governed by Delaware law. EPA § 11.14. 71 PTO ¶ 46. 13 Gill (defined in the EPA as the “Key Employees”) and other Unknown Worlds team

members also became eligible for a $250 million earnout payment. 72

Eligibility for the performance-based earnout is determined by Unknown

Worlds’ revenue through December 31, 2025, with an option to extend the earnout

period through June 2026.73 The earnout formula is highly leveraged. If Unknown

Worlds surpasses a revenue threshold of $69.8 million, Krafton must pay $3.12 for

each additional dollar of revenue generated, up to the $250 million cap. 74

To give them runway to achieve these targets, the Key Employees secured a

measure of autonomy. The EPA grants them “operational control” of Unknown

Worlds “in all material respects.”75 This authority allows the Key Employees to

direct the “product roadmap, launch, planning, partnering, budgeting and employee

matters.”76 Their control rights endure so long as any of the Key Employees remains

employed by Unknown Worlds. 77

The Key Employees, in exchange, agreed to run Unknown Worlds in the

“[o]rdinary [c]ourse of [b]usiness,” meaning “consistent with the past custom[s] and

72 Id. ¶¶ 49, 51; see EPA § 2.7(a). 73 EPA § 2.7(a)-(b). 74 Id. § 2.7(a); see also PTO ¶ 58. 75 EPA § 2.7(f). 76 Id. 77 Id. 14 practice[s]” of Unknown Worlds.78 Krafton’s consent was required for certain

matters listed in Schedule II to the EPA, including issuing dividends, incurring debt,

changing the corporate structure, or granting intellectual property licenses.79

The parties also set the consequences of a Key Employee’s departure. Rather

than condition the earnout on continued employment of all Key Employees, the

parties priced in a modest financial adjustment. If Cleveland, McGuire, or Gill left

the company during the earnout period, the qualifying revenue would be reduced by

$1 million per departing Key Employee.80

Alongside these financial contingencies, the EPA defined the grounds for a

Key Employee’s termination for “Cause.”81 The definition of Cause was specifically

negotiated.82 Under the agreement, a Key Employee could be fired for Cause if he

engaged in the commission of a felony, the “intentional, wrongful disclosure of trade

secrets or confidential information,” “a willful act or omission . . . that constitutes

gross misconduct,” or an “intentional act of fraud or dishonest[y].”83

78 Id. § 1.1 (defining “ordinary course of business”). 79 Id. at Schedule II (listing negative covenants). 80 EPA § 2.7(a), Ex. B § (1)(f); see supra note 392. 81 EPA § 2.7(f). 82 See Gill Tr. 131-32 (agreeing that the contract he “helped negotiate included a specific definition for what would constitute cause”). 83 EPA § 1.1 (defining “Cause”). 15 Separately, Cleveland, McGuire, and Gill each entered into Employment

Agreements with Unknown Worlds.84 They were required to be employed as of

closing, after which they were “at will” employees.85 They agreed to devote

“substantially all of [their] business time and efforts” to Unknown Worlds.86 They

also agreed to perform the duties associated with their executive positions and “such

additional duties” as Unknown Worlds’ Board of Directors (the “Board”) might

assign.87 The agreements reinforced that, as officers, the Key Employees owed

fiduciary duties to Unknown Worlds.88

I. Post-Closing Roles

After the acquisition closed, Unknown Worlds’ multi-game division of labor

continued. Moonbreaker received the bulk of the Founders’ focus, as it had for

several years. Cleveland served as the Game Director, leading the design and

creative vision, while McGuire acted as the Technical Director, building the game’s

84 JXs 256-58 (“Employment Agreements”). The Employment Agreements are governed by California law. See, e.g., JX 256 § 15(a). 85 See, e.g., id. §§ 2, 6(b). 86 See, e.g., id. § 2(b). 87 Id. 88 Id. (listing activities that the employee may engage in as long as he does not “create a potential business or fiduciary conflict”). 16 codebase.89 Neither Founder had a day-to-day role on the Subnautica franchise,

which continued to run under the leadership of Kalina and the Below Zero team.90

Cleveland was not entirely divorced from Subnautica, however. With

Krafton’s encouragement, he explored opportunities for a Subnautica film or

television adaptation.91 This “transmedia” strategy was a means to broaden the

game’s audience and increase the IP’s value—a goal shared by Unknown Worlds

and its new parent company.92

While the Founders focused on creative development, Gill ensured the studio

ran smoothly. As President, Gill managed the business operations and served as

Unknown Worlds’ primary liaison with Krafton.93 He worked closely with Maria

Park, Krafton’s Head of Corporate Development, who joined the Board.94 Park was

Unknown Worlds’ assigned “advocate” within Krafton, acting as a bridge that

89 See Cleveland Tr. 699-701; McGuire Tr. 239; JX 1087 at 7. 90 Gill Tr. 38; Cleveland Tr. 694. 91 Cleveland Tr. 705; see JX 412; see also Gill Tr. 20, 50. 92 See Kim Tr. 464-65. 93 Gill Tr. 32 (discussing how Gill “ended up in a lot of meetings with a lot of different people across [Krafton’s] many, many, many departments” after the acquisition because “everyone was excited to talk to this new subsidiary”); Park Tr. 486 (discussing how Gill kept the “communication channel” between Krafton’s studio champion and Subnautica “to him[self] mostly”). 94 Park Tr. 482, 504. 17 supplied guidance and secured internal resources.95 With Park facilitating support,

Gill oversaw the integration of Krafton’s “menu” of services, including financial

budgeting, marketing, and legal functions.96

The first year post-closing was defined by collaboration and optimism.

Cleveland alternated between devoting time to Moonbreaker and coaching the vision

of the Subnautica team.97 Krafton was enthusiastic about Moonbreaker’s progress

and Subnautica’s strong revenue generation.98

J. The Moonbreaker Breakdown

The honeymoon was short-lived.

In September 2022, Unknown Worlds released Moonbreaker into early

access. The game represented a bold attempt to digitize the tabletop experience,

featuring a novel painting suite that modeled the precision of creating physical

miniatures.99 But despite positive critical reception for its innovative mechanics, the

game failed to find a sustainable audience. Player counts dropped, and revenue fell

Id. at 485-86, 505-06 (describing her role as the “champion” for Unknown Worlds within 95

Krafton); Gill Tr. 56. 96 Gill Tr. 31, 67, 83; Park Tr. 487. 97 Cleveland Tr. 700-01; see also Gill Tr. 32 (describing the mood post-acquisition as “very positive” with “a lot of excitement”). 98 JX 1087 at 7 (Park discussing the Founders’ hard work in the aftermath of the acquisition); Gill Tr. 24 (discussing ongoing Subnautica revenue); see Gill Tr. 32. 99 JX 259. 18 well below projections. 100 Through September 2023, Cleveland and his team

worked around the clock in “emergency mode,” to no avail.101

For Cleveland, the failure was profound. He had devoted years of long hours

and intense creative energy to the project he considered his masterpiece.102 To see it

rejected by the market was a “tough pill to swallow.”103

Burned out and heartsick, Cleveland admitted to his colleagues at a late 2023

retreat in Italy that he had “hit a wall.” 104 When the rest of the team traveled home,

Cleveland decided to stay behind for several weeks.105 He stepped away from the

studio’s daily operations to focus on his mental health.106

This break was not kept from Krafton. Park attended the retreat in Italy and

witnessed Cleveland’s emotional statement firsthand.107 So did “Jay,” the “Studio

Supporter” Krafton assigned to assist the daily functioning of Unknown Worlds.108

100 See Gill Tr. 35-36; JX 390 (initial post-mortem report). 101 Cleveland Tr. 701-02. 102 Id. 103 Id. at 702. 104 Id. at 702-04; see also Gill Tr. 36. 105 See JX 344. 106 Cleveland Tr. 704-06; see also JX 344 (email discussing extended leave). 107 Cleveland Tr. 703; Gill Tr. 36-37. 108 See Gill Tr. 36 (“Maria attended, as well as Jay from the Krafton side, our studio champion and our [Studio Supporter].”). 19 After the retreat, Cleveland continued to be transparent with Park about his need for

a break.109 Park did not object.

K. New Roles and Strategic Pivots

Cleveland took an extended leave to recover.110 While he was away, Unknown

Worlds began early development on Subnautica 2, the highly anticipated sequel to

its flagship franchise. Gill ran the studio, while Kalina—who had led Below Zero’s

creation—spearheaded development of the sequel.111 Kalina and his team worked

diligently to advance Subnautica 2 through its early phases.112 But without the direct

involvement of Subnautica’s original creators, the team struggled to find the game’s

identity.113

Cleveland returned from his leave in early 2024 and began to reshape his

relationship with Unknown Worlds. He shared with family and friends that he was

109 Cleveland Tr. 707; see Park Tr. 491 (acknowledging that developers need time to recover after failures and that she expected Cleveland would take a break); JX 854 at 7 (Slack message from Park); see also Park Dep. 56-57 (discussing Cleveland’s burnout); JX 396 at 2 (Cleveland recounting when he “completely burned out in September” to Park). 110 Cleveland Tr. 704-05. 111 Gill Tr. 62 (discussing “no change” in his role leading operations and confirming he “manage[d] all the studio operations”); Park Tr. 576 (explaining that Kalina “ended up leading SN2” since Cleveland had been “all-in on Moonbreaker”); Gill Tr. 38. 112 See Cleveland Tr. 701-02 (describing his role as “coaching” and being “in the wings on standby”). 113 JX 686 at 5 (“We can’t even get [M]ax to look at some code for Sn2 water to help us.”); see Gill Tr. 180; see also McGuire Tr. 268; Cleveland Tr. 778 (testifying the team “felt a bit lost; like, they didn’t know exactly what kind of game they were making”). 20 “no longer making video games.”114 He dedicated his limited working hours—about

four per week—to leading a Subnautica film adaptation.115 He viewed this not as an

abandonment of his job, but a strategic “transmedia” pivot.116 His hope was that

Subnautica’s cinematic debut would drive millions of new players to the game and

materially increase the franchise’s value, much like The Last of Us or Fallout had

reignited enthusiasm through screen media.117

At the same time, Cleveland resumed his mentoring of the game development

team and saw that they were “a bit lost” on Subnautica 2.118 Cleveland urged Kalina

and co-project lead, Anthony Gallegos, to build a “holistic prototype” to find the

game’s core loop.119 But he maintained his boundary of not leading game

development and respected the team’s autonomy.

McGuire underwent a parallel transition during this time. As Unknown

Worlds scaled, the Technical Director role required more people management and

114 JX 469 at 1. 115 Cleveland Tr. 804 (testifying he worked “probably four-hours a week” on the film). 116 Id. at 705 (“I did start basically dreaming of a Subnautica film . . . something was being born there.”); id. at 721 (“I started working on that much more seriously [in the beginning of 2024].”). 117 Id. at 730-31 (testifying that films are “huge, huge moments for video games, and they bring an entirely new audience in and they bring a lot of revenue”). 118 Id. at 778 (testifying the team “felt a bit lost; like, they didn't know exactly what kind of game they were making”). 119 Id. at 713-14 (discussing JX 400 video regarding coaching frustrations and pushing for a holistic prototype); JX 400; see also Cleveland Tr. 701. 21 less coding. McGuire felt that his core strengths—scrappy, hands-on coding and

rapid prototyping—were no longer a fit within the more bureaucratic organization.120

He had become, in his view, “obsolete.”121

By the spring of 2024, McGuire confided in Gill and Cleveland that he wanted

to quit Unknown Worlds.122 Gill recognized McGuire’s value and encouraged him

to stay on in a different role that McGuire found meaningful.123 Gill reminded

McGuire that a financial adjustment to the earnout threshold would be made if

McGuire were to quit.124

Despite their distance from the heart of the studio, Cleveland and McGuire’s

involvement paid off. In the spring of 2024, McGuire teamed up with Cleveland to

build a prototype of Subnautica 2 to help guide the team.125 When it became clear

that the existing leadership structure was not working, the Key Employees made a

change. The studio replaced Kalina and elevated Anthony Gallegos to lead designer.

120 Cleveland Tr. 729-30; McGuire Tr. 242-43, 335-36; JX 476. 121 McGuire Tr. 292-93; JX 434 (McGuire’s personal notes). 122 McGuire Tr. 244 (“I did tell [Gill] that I wanted to quit.”); JX 565 at 109 (McGuire writing in his journal: “I met with Charlie and Ted to let them know I’m quitting.”); id. at 20, 82. 123 McGuire Tr. 245 (testifying that Gill “did a great job helping restore my confidence” and “talked about ways that we could resolve that conflict”); id. at 290 (“[Gill] convinced me not to leave.”); Gill Tr. 45-46. 124 See Gill Tr. 46-48 (testifying they discussed the earnout but noting the adjustment “wasn’t something that we thought was a major concern”); see also id. at 45-46. 125 McGuire Tr. 335-36; Cleveland Tr. 728-29; JX 1330 at 3. 22 “[T]he progress of the game . . . completely took off.”126 This successful course

correction set the stage for Cleveland and McGuire to formalize their new roles.

L. Krafton’s Knowledge and Support

Krafton remained apprised of Unknown Worlds’ status and the Founders’

reduced capacities, including from Gill’s regular updates to Park.127

As early as February 2024, Krafton learned that Cleveland would not be

working directly on Subnautica 2. Notes of a meeting between Park, Gill, and Jay

(the assigned Studio Supporter) state that though “[s]ome people in [Krafton] HQ

[were] expecting C[leveland] to be working on Subnautica 2,” Park was to “manage

expectations” at Krafton.128 It was mutually understood that Cleveland would “not

be working directly on the game as he would like to empower the current team.” 129

By July 2024, months of discussions culminated with Gill formalizing

planned title changes for the leadership team with Park.130

Cleveland would become the “Franchise Creative Director” with a “focus . . .

on Subnautica, exploring TV and film opportunities.”131 When Park suggested her

126 Cleveland Tr. 720. 127 Gill Tr. 67-68; Park Tr. 493, 522; see also id. at 486, 488. 128 JX 394 at 3; see Gill Tr. 42-44. 129 JX 394 at 3. 130 JX 471 (Slack message from Gill to Park); PTO ¶ 76. 131 JX 478 at 1 (emphasis added); see Gill Tr. 64. 23 and Kim’s expectation that Cleveland would “have a stronger focus on creatives and

IP,” Gill corrected her.132 He clarified that Cleveland “wasn’t doing anything on the

studio operations side, at all . . . (and ha[d]n’t for a long time).”133

McGuire would become the “Special Projects Director.”134 As Gill told Park,

McGuire would “stop managing people and focus purely on tech and R&D.” 135

McGuire’s main interest was exploring how Subnautica benefited neurodivergent

players and children with autism. 136

Gill would transition from President to CEO. This change would

accommodate Krafton’s corporate structure, which required a studio CEO to handle

budgeting and high-level administrative approvals.137 Gill’s purview, however,

would not change.138

Park understood the realignment, writing: “I guess within the studio there [is]

not really much change” but “title changes that more clearly represent the actual

132 JX 471 at 2. 133 Id. (Gill writing: “[W]hile he’s attended meetings . . . he doesn’t do any of the work or contribute to operational tasks.”). 134 McGuire Tr. 247; JX 478 (email announcing Special Projects Director role). 135 JX 471 at 3. 136 JX 476 (notes on how McGuire wants to “[r]esearch how games could actually be adding to the world” and noting that he received “lot of emails from parents of kids on the autism spectrum” who had benefitted from the game); see also JX 591 at 4. 137 Gill Tr. 53-54, 64-65; JX 478. Gill Tr. 62 (discussing “no change” in his role leading operations and confirming he 138

“manage[d] all the studio operations”). 24 roles” of Cleveland and McGuire.139 She later gave Gill an update that Krafton had

“no concerns about announcing the [role] changes before [Unknown Worlds’]

August retreat.” 140 That consent included Kim, whom Park had updated.141 Kim

was reminded of the title changes in a meeting several weeks later and did not

object.142

Krafton also learned that Cleveland and McGuire each voluntarily reduced

their salaries from nearly $400,000 to $100,000 to reflect their reduced operational

roles. Gill entered these salary changes directly into Krafton’s centralized human

resources system, which gave Krafton visibility into the adjustment. 143 Krafton’s

finance team, including its Head of Global Finance, reviewed and processed the

payroll updates.144 The reduction was included in internal Krafton spreadsheets

circulated among its executives.145

Krafton was overall supportive of the Founders’ revised roles—particularly of

Cleveland’s cinematic focus. Expanding the Subnautica IP into other media had

139 JX 471 at 2; see also Gill Tr. 67; Park Tr. 532-35; JX 508A (showing Park understood Cleveland’s role would not include Subnautica 2). 140 JX 471 at 3. 141 Id. at 2-3; PTO ¶ 76. 142 JX 584; JX 585A; Oliveira Tr. 368-71. 143 JX 803A; Yoon Tr. 644-45; Gill Tr. 70-71, 159. 144 Gill Tr. 68-70; JX 490; JX 495. 145 JX 803A (staffing tab, rows 20, 55); Yoon Tr. 623-24 (discussing JX 827, where he asks Park about the salary reduction seen in the data); JX 827. 25 been a shared strategic pillar since the acquisition.146 A Subnautica movie was

viewed by Krafton as a low-cost, high-reward way to elevate the brand globally and

increase game sales.147

To build his Hollywood network, Cleveland also dabbled in other film ideas,

including a Christmas movie and a zombie script.148 He was open about these efforts

both with Krafton and publicly. For example, in November 2024, he emailed Park

that he was making a Christmas movie, and in February 2025, she received a link to

a podcast documenting his filmmaking journey.149 Krafton leadership accepted these

efforts. Park said that Krafton “d[id]n’t intend to hinder [Cleveland’s] Hollywood

development” because film experience could serve as a “stepping stone” to a

successful Subnautica movie.150 She even relayed that Krafton’s Chairman had

suggested they “officially recogniz[e]” Cleveland’s film project.151

146 See Park Tr. 482; Cleveland Tr. 721-22; Kim Tr. 393. 147 See Park Tr. 539-40; Kim Tr. 464-65; Cleveland Tr. 722-23 (“She [Sujin Lee] was excited about the Subnautica film. . . . [Krafton was] totally on board.”). 148 Cleveland Tr. 735-36. 149 JX 561 (Nov. 2024 email); JX 605 (Feb. 2025 Slack message with podcast link); see also JX 1331 (WhatsApp messages about the zombie movie). 150 JX 1245A (translation) 45 (Feb. 27, 2025 message between Park and Kim, agreeing that the Christmas movie seems to be “a beneficial experience for the company. . ., so we don’t intend to hinder his Hollywood involvement”); JX 605 at 2 (Feb. 9, 2025 Slack from Park to Oliveira: “this experience could become a stepping stone”); see also Park Tr. 539-40 (agreeing the Christmas movie could be a “stepping stone” to a successful Subnautica film). 151 JX 1245A (translation) 45 (Feb. 2025 message between Park and Kim). 26 McGuire’s shift, though less outward facing than Cleveland’s, was also

disclosed to Krafton. In December 2024, Thiago Oliveira—the new Studio

Supporter assigned by Krafton to Unknown Worlds—included Park on an email

titled “CSR Initiatives,” which “[d]iscuss[ed] ways Krafton can support Max’s new

projects” on social impact.152 Park also received correspondence linking McGuire’s

work to Krafton’s corporate social responsibility goals. 153

M. Subnautica 2

As Cleveland and McGuire’s new roles took shape, the Subnautica 2 team hit

its stride under Gill’s leadership and Gallegos’s creative vision. The game

underwent an “incredible transformation” that made up for the project’s slow

development timeline.154 In May 2025, Cleveland play-tested the latest build. His

reaction, captured on video, was unbridled enthusiasm.155 The team had taken the

vision he shared upon his return to Unknown Worlds and expanded upon it

autonomously.

152 See JX 591 (email from Oliveira to Park about “Krafton x UW Collaborating on CSR Initiatives”); Park Tr. 560; Yoon Tr. 607. 153 Park Tr. 503, 558-61. 154 Gill Tr. 72 (testifying that under Gallegos, it was an “incredible transformation” and the “velocity picked up immediately”). 155 JX 740 (playtest video); Cleveland Tr. 811-12, 842-43. 27 The game was shaping up to be “amazing,” and the studio prepared for a

launch.156 Consistent with Unknown Worlds’ “secret sauce” of early access

development, the team targeted August 2025 for the initial release.157 It knew the

game was not “finished”—early access games never are—but it contained the core

loop, content, and polish required for the community to experience it and provide

needed feedback.

In April, Krafton greenlit a trailer announcing that the game would launch in

early access “later in 2025.”158 A “developer video blog” posted online featured

Gallegos telling fans that they would soon be invited “on a futuristic underwater

survival adventure, set in an all-new mysterious alien world.”159 Gallegos also

announced that “[f]or the first time,” fans would have “the chance to experience

Subnautica 2 with [their] friends in a co-op” rather than only solo play. 160 He

encouraged fans to “tell [the team] exactly what [they] think” about the game’s “new

vehicles, craftables, biomes, and leviathans.”161

156 Cleveland Tr. 745 (testifying that the game demo “looked totally amazing”). 157 Gill Tr. 21-22 (discussing Unknown Worlds’ “secret sauce”); id. at 75 (“We had narrowed it to August at that time . . . August 14 of 2025.”). 158 See id. at 77; JX 1093. 159 JX 1093; see Gill Tr. 74-78. 160 JX 1093. 161 Id. 28 The team was excited, the game was playable, and the release date was set.162

The gaming community’s response was highly enthusiastic. Millions of people

expressed their interest in buying Subnautica 2 on Steam, the “largest PC store for

[Unknown Worlds’] games.”163

Krafton’s enthusiasm soon evaporated.

N. The Milestone Review

In May 2025, the parties scheduled a milestone review meeting. For

Unknown Worlds, this was an opportunity to coordinate with Krafton on marketing

and publishing logistics for the upcoming launch.164 Krafton’s finance team ran

earnout projections to prepare for the meeting.165 Their models predicted that a

successful August 2025 early access launch of Subnautica 2, with “over 1.67 million

copies sold by Q4 2025,” would generate significant revenue and “trigger [the]

earnout.”166 A “Financial Planning Base” case scenario indicated a $191.8 million

162 Gill Tr. 72-73 (testifying that the game was “coming together fantastically well” and that playtest feedback was increasingly positive); id. at 103 (“[W]e’re going to go ahead and announce the date publicly.”). 163 Id. at 105-06. 164 Id. at 84-85. 165 JX 1199A at 1. 166 JX 690A at 1; JX 1199A at 1. 29 total earnout payment, and a best-case scenario indicated a $242.2 million

payment.167

These figures immediately captured the attention of CEO Kim.168 Kim, who

had personally led the acquisition of Unknown Worlds, felt that Krafton had

overpaid.169 He feared that making an earnout payment would earn him a reputation

as a “pushover.”170

At a May 20, 2025 meeting, Kim told Cleveland that paying the earnout

“could significantly reduce the studio’s book value.”171 Kim said that this reduction

was “something he, as [the] person who was in charge of the investment, would have

to be accountable for.”172 When Kim asked if there was “a need to rush the release,”

Cleveland held firm that “delaying the project increases risk” and that “it’s better to

launch early, get user feedback, and improve from there.” 173

167 JX 1199A at 2; see JX 690A (email regarding “Earn-out Scenario Analysis”). 168 Kim Tr. 478 (confirming he saw the forecast). 169 Id. at 406-07, 435; see also Kim Dep. 39, 52. 170 JX 1192A at 2 (“Everyone admits the contract was a bad deal, but the problem is that we keep being the fool even afterward. It’s not about the money—it just feels awful to be taken advantage of. For a registered director, being a ‘pushover’ would even amount to breach of fiduciary duty.”). 171 JX 730A at 2 (Krafton’s Young Kim’s contemporaneous notes summarizing the meeting for Park); Kim Tr. 431 (confirming he said the earnout would “significantly reduce the studio’s book value”). 172 JX 730A at 2; see Cleveland Tr. 744. 173 JX730A at 2. 30 A week later, the planned milestone review meeting went forward. Gallegos

showed Krafton executives the latest game build, which showed great progress.174

Gill and Cleveland advocated for support for the planned August 14 release.175 But

some Krafton executives claimed the game was “not ready” for release, citing a lack

of “freshness” and “volume.”176 Krafton’s Oliveira told a colleague he was “starting

to think . . . that people are trying to create excuses to not pay the earn outs.” 177

O. Krafton Scrambles

By the end of May, Kim had looped in Park and Krafton’s Legal Department

to discuss the earnout. Kim was focused on the amounts that each of Cleveland,

McGuire, and Gill stood to make, which he viewed as “greed.”178 He complained

that the EPA was a “bad deal” and felt “taken advantage of.”179 Park cautioned him,

though, that she “d[id]n’t think the current [Subnautica 2] build [wa]s in such bad

174 JX 1179 (May 27, 2025 milestone review presentation); Park Tr. 512-13; JX 1193 at 2 (Krafton’s creative director: “[B]ased solely on the build and the development situation, I think it is better to proceed with the EA [early access] within this year in line with the Development Team’s opinion.”). 175 Gill Tr. 86-87. 176 Kim Tr. 397 (claiming game lacked content); Gill Tr. 86 (“Instead of it being a meeting about publishing and making the game successful, it became them making—them being our colleagues at Krafton, Inc.—sharing reasons why they believe the game should be delayed and pushed out.”); JX 2015 (Milestone Review Recommendation). 177 JX 742. 178 JX 765A at 2 (“Human greed really has no limit.”). 179 Id. (Kim to Park: “bad deal,” “taken advantage of”). 31 shape,” which could create a “debatable” issue in “potential litigation.” 180 She also

noted that “apart from C[leveland] personally,” who had “become negligent since

Moonbreaker,” she “would say that [Unknown Worlds] hasn’t been so poorly

managed as to deliberately deceive the parent company.” 181

Kim remained focused on the “cost Krafton has to pay with the enterprise

value [it was] actually gaining.”182 Krafton’s analysis showed an “Enterprise Value”

of approximately $93.5 million compared to a projected $191.8 million earnout. 183

Kim began to explore options, including firing the Key Employees.

On June 2, Park warned Kim over Slack that a “dismissal with cause” would

not eliminate the earnout obligation, while exposing Krafton to “lawsuit and

reputation risk.”184 And so Kim turned to ChatGPT for help.185 When the AI chatbot

responded that the earnout would be “difficult to cancel,” Kim complained to Park

180 Id. at 2-3. 181 Id. at 2. 182 Id. at 3 (capitalization omitted). 183 JX 771 at 150; see Park Tr. 552-53. 184 JX 1188 at 1 (Slack message from Park to Kim: “Hi CEO . . . it seems to be highly likely that the earn-out will still be paid if the sales goal is achieved regardless of the dismissal with cause. Therefore, there isn’t much that we can practically gain other than punishment with a simple dismissal alone, whereas I am worried that we may be exposed to lawsuit and reputation risk . . .”); see also JX 778; JX 778A. 185 Kim Tr. 440-41. Kim admitted at trial that he had deleted specific, relevant ChatGPT logs. Id. at 441. This particular chat was deleted. Id. 32 that the EPA was “a contract under which we can only be dragged around.”186 He

expressed frustration that Unknown Worlds had the “authority to determine the

release date and determine publishing” without Krafton’s involvement. 187 Kim

asked Park to reach out to the Legal Department and to call him. Moments later,

Park sent Kim the section of the EPA discussing the Key Employees’ “operational

control” over Unknown Worlds for so long as “any Key Employee is employed by

the Company.”188

P. Project X

At ChatGPT’s suggestion, Kim formed an internal task force, dubbed “Project

X.”189 The task force’s mandate was to either negotiate a “deal” on the earnout or

execute a “Take Over” of Unknown Worlds. 190 They looked to buy time.

On June 4, Richard Yoon—Krafton’s Head of Strategy and Operations—

circulated a “plan” outlining “[n]ext steps” after having a discussion with Kim.191

He directed that Krafton’s messaging, including to Gill, be that Krafton was “in the

186 JX 1188 at 3 (Slack message from Kim to Park: “Now, chatgpt starts to answer that it is difficult to cancel the earn-out.”); Kim Tr. 440-41. 187 JX 1188 at 3. 188 Id. at 4 (pasting in language from the EPA). 189 Kim Tr. 449 (confirming “Project X” name); Yoon Tr. 651; JX 820A at 3. 190 JX 917A (Project X update email regarding “Take Over” strategy). 191 JX 934A at 20; Park Tr. 508. 33 process of internal alignment.”192 He also shared a draft announcement that Krafton

would make to Unknown Worlds’ fans, suggesting that Subnautica 2 would be

delayed and that Cleveland and McGuire had been uninvolved with the game. 193

By June 5, Krafton continued to put Gill off. Gill grew concerned, writing to

Kim that he would appreciate Kim’s “recommendation as soon as possible.”194 Gill

explained that Krafton had become non-responsive “with launch planning,” leaving

Unknown Worlds with “zero progress on many key initiatives.” 195 He received no

response.

Meanwhile, Kim sought ChatGPT’s counsel on how to proceed if Krafton

failed to reach a deal with Unknown Worlds on the earnout. The AI chatbot prepared

a “Response Strategy to a ‘No-Deal’ Scenario,” which Kim shared with Yoon.196

The strategy included a “pressure and leverage package” and an “implementation

roadmap by scenario.” 197 It also suggested a “key summary of responses” Krafton

could deliver to the Key Employees:

192 JX 934A at 20. 193 Id. at 21. 194 JX 1189A at 4. 195 Id. 196 Id. at 2; see Kim Tr. 444. 197 JX 1189A at 2 (capitalization omitted). 34 Key Summary of Responses a. Preemptive Framing - Repeat that protecting quality and fan trust is the highest priority, undermine the ‘Large Corporation VS. Indie’ framing b. Securing Control Points - * Lock down Steam/console publishing rights and access rights over code/build pipeline through both legal and technical aspects. * For the earn-out freeze, keep room for negotiations through provision stating “immediate removal if specific development results are achieved” a. Systematic materials for legal defense - Prepare contract interpretation memorandums, log all communications, seek external consultation b. Team retention - Operation of retention packages for key personnel and rapid backfill pipelines in anticipation of resignation/departure scenarios c. Two handed strategy - Create a structure that allows for both hardball (Legal+ Finance) and softball (Support/Incentives) approaches so moderate factions within Unknown Worlds can push for compromise.198

Over the next month, Krafton followed most of ChatGPT’s recommendations.

First, Krafton pursued “preemptive framing” by taking the fight directly to

Unknown Worlds’ fans.199 On June 12, Krafton posted a message on the Unknown

Worlds and Subnautica websites. It stated: “To our 12 million fellow Subnauts . . . .

We have asked the series’ creators—Charlie Cleveland and Max McGuire—to once

198 Id. (emphasis added). 199 JX 934A at 13-14 (Kim writing that the goal of the message was to “secure public support from fans and legal validation of our legitimacy” and suggesting that ChatGPT draft the message). 35 again helm the journey” to Subnautica 2.200 It also stated (falsely) that “Charlie and

Max [we]re considering [Krafton’s] invitation.”201 Gill and the Unknown Worlds

team were shocked, since they had “nothing to do with” the message, which Krafton

had posted “overnight.” 202

Second, Krafton “secur[ed] control points.” As ChatGPT recommended,

Krafton locked down Steam publishing rights to ensure Unknown Worlds could not

publish Subnautica 2.203 This severed Unknown Worlds’ practical ability to launch

Subnautica 2. Gill repeatedly asked Krafton to return control of the Steam platform

to Unknown Worlds.204 Krafton ignored him, except for Oliveira, who told Gill (via

a LinkedIn message): “[Kim] has no intention of transferring stuff back to you guys

(like the Steam app).”205

Third, Krafton prepared “systematic materials for legal defense.” Its Legal

Department wrote “contract negotiation memorandums,” including what they

referred to as the “Legal Letter,” sent to the Founders on June 10. 206 The letter made

200 JX 1039. 201 Id. 202 Gill Tr. 98-99. 203 Id. at 105-06. 204 Id. at 106. 205 Id. at 110, 113; JX 1309. 206 Yoon Tr. 654-55; JX 840 (the “Legal Letter”); JX 1202A (June 8 Slack messages between Kim and Yoon about sending “the legal letter” to the Founders); JX 934A at 12 (Krafton legal circulating a draft of the “legal letter” on June 6). 36 three demands: (1) that Cleveland and McGuire’s titles revert to Game Director and

Technical Director; (2) that Cleveland and McGuire “rededicate themselves to

leading the development of [Subnautica 2]”; and (3) that Gill and the Board “enable

the implementation” of those steps.207 Krafton also began to gather “supporting

materials” showing Cleveland’s film forays and social media posts.208

Krafton’s seizure of Steam and other systems forced Gill to the negotiating

table, and they began to discuss a solution.209 This included having the Key

Employees transition out of Unknown Worlds and settle “on the earnout to some

amount.”210 When the negotiations stalled, Yoon told Kim on June 27: “It might

actually be easier to just do a takeover.”211 Kim responded: “Set a date.”212

Q. The Terminations

On July 1, 2025, Krafton sent termination letters to Cleveland, McGuire, and

Gill, removing them from their positions effective July 31. 213 The letters identified

a single ground for dismissal: the “intention to proceed with a premature release of

207 JX 840 at 3. 208 JX 843A; JX 1202A (Slack messages regarding “systematic materials for legal defense”); Gill Tr. 91 (testifying about logging communications). 209 Gill Tr. 212, 226-27; id. at 108. 210 Id. at 109-10; Park Tr. 518-519, 521-25. 211 JX 1190A (Slack between Yoon and Kim). 212 Id. 213 JXs 954-56; JX 959. 37 Subnautica 2.”214 Krafton asserted that releasing the game in August would “inflict

long-term damage on the reputation of the game and franchise.”215

That same day, Krafton removed the Key Employees from Unknown Worlds’

Board and replaced them with three Krafton representatives (in addition to Park). 216

The new Board resolved “that Subnautica 2 shall not be released for early access

absent further review and the affirmative vote of a majority of the Board.” 217

To replace Gill as CEO, Krafton appointed Steve Papoutsis.218 Papoutsis was

already the CEO of another Krafton subsidiary, and would run Unknown Worlds

part-time.219 Before his appointment, he had neither played an Unknown Worlds

game nor overseen the development of an early access title.220

R. The Data Downloads

The Key Employees were not surprised by their terminations. After watching

Krafton starve the studio of its publishing resources and lock them out of the Steam

publishing platform, they expected that Krafton would take this drastic step. In

214 JXs 954-56 (emphasis added). 215 Id. 216 JX 961. 217 Id. at 2 (emphasis added). 218 Yoon Tr. 658-59; JX 961 at 2. 219 See Papoutsis Dep. 36-40; Yoon Tr. 658-60. 220 JX 945; Yoon Tr. 660; Papoutsis Dep. 55, 72. 38 anticipation of further escalation, they initiated large-scale data downloads of

Unknown Worlds’ company files and data.

Gill began his downloads in early June, exporting his company email account,

documents from Unknown Worlds’ Google Drive, and Slack messages.221 Late-

night download activity on June 2 caused an automated security alert to Unknown

Worlds’ Operations Manager, Stephanie Ramirez.222 The next morning, Ramirez

told Gill that she “[s]aw the Google alert that [he] kicked off a data export” and

wanted to confirm “it was [Gill].” 223 Gill responded that he was “just backing a few

things up.”224

McGuire also executed massive data exports. On June 27, he downloaded

99,902 files from his Unknown Worlds Google Drive and the company’s shared

drive folders.225 His downloads included Moonbreaker and Subnautica-related

documents and directories.226 McGuire downloaded these files to a second hard

drive on his home computer. 227

221 Gill Tr. 115 (testifying he downloaded his company email, Google Drive files, and Slack messages). 222 Id. at 116-17; JX 786. 223 JX 786 at 2; see Gill Tr. 204-05. 224 JX 786 at 2; Gill Tr. 205. 225 McGuire Tr. 257 (confirming downloads of emails, legal documents, and Google Drive folders); id. at 332; PTO ¶ 106. 226 McGuire Tr. 329-30. 227 Id. at 258. 39 Cleveland downloaded 72,140 files from the studio’s servers, enlisting

McGuire’s technical assistance to help him archive the materials. 228 Cleveland’s

downloads included legacy game files and proprietary source code. 229 Additionally,

on July 2—the day after he received his termination notice—Cleveland accessed the

studio’s collaboration platform to export files, including a Subnautica 2 “Prototype

Design” board.230 Cleveland also deleted several personal files. 231

Yoon testified that “by June 27, 2025,” Krafton had discovered the Key

Employees were downloading data to personal devices.232 After the July 1

terminations, Krafton’s IT and legal teams learned the full extent of the Key

Employees’ downloads.233 Other than the personal files deleted by Cleveland, the

Key Employees subsequently returned all of the downloaded files to Krafton upon

its request.234

228 Cleveland Tr. 824-25 (confirming he sent McGuire a video instructing him on what to download); JX 1043 ¶ 17(b). 229 Cleveland Tr. 825-27. 230 Id. at 831-32; JX 1046. 231 Cleveland Tr. 749, 832. Cleveland also testified that he deleted board game prototypes. At post-trial argument, Fortis’s counsel represented that Cleveland returned the prototype files. See Tr. of Jan. 9, 2026 Post-trial Oral Arg. (“Post-trial Arg. Tr.”) 146. 232 Yoon Tr. 616 (“[B]y June 27 . . . . we also found out that some of the assets and data w[ere] being downloaded personally to their computers.”). 233 Id. at 625. 234 Gill Tr. 118; McGuire Tr. 258; Cleveland Tr. 749-51. 40 S. Litigation Ensues

On July 10, 2025, Fortis Advisors, LLC, as the representative of the former

stockholders of Unknown Worlds, filed this action against Krafton. 235 The complaint

alleges three counts, including breach of contract to obtain damages for violations

of the EPA, breach of contract to obtain specific performance of the EPA, and breach

of the implied covenant of good faith and fair dealing. 236 Fortis moved to expedite

the suit, which I granted in part.237 I expedited only the portion of the claim for

specific performance concerning the propriety of the Key Employees’ terminations

and loss of operational control.238 I reasoned that the deprivation of control over a

unique asset presented a threat of irreparable harm. 239 This decision effectively

bifurcated the proceeding into two phases: the present expedited phase concerning

specific performance and operational control (“Phase One”) and a later phase

concerning the earnout and money damages (“Phase Two”).

On August 4, 2025, Krafton answered the complaint, stating that “[d]ue to the

unprepared release of Subnautica 2, Krafton . . . was left with no choice but to

235 Verified Compl. (Dkt. 1) (“Compl.”). 236 Compl. ¶¶ 168-86. 237 Dkt. 29. 238 Tr. of July 18, 2025 Hr’g on Pl.’s Mot. to Expedite (Dkt. 36) 35-37. 239 Id. at 36. 41 terminate” the Key Employees.240 During discovery motions practice, Krafton

began to assert that the Key Employees were terminated due to their role changes

and downloads of confidential information.241

The parties filed pre-trial briefs on November 6.242 A three-day trial was held

from November 17 to 19. After post-trial briefing was complete, oral argument was

presented on January 9, 2026.243

II. ANALYSIS

In Phase One of this litigation, Fortis tried its breach of contract claim seeking

specific performance to restore the Key Employees to their positions at and

operational control of Unknown Worlds. To prevail on this claim, Fortis must prove

the existence of a contract, the breach of an obligation imposed by that contract, and

resultant damage.244 It bears the burden of proving these elements by a

preponderance of the evidence.245 Krafton, in turn, bears the burden of proving by

240 Def.’s Answer to Verified Compl. (Dkt. 39) (“Answer”) ¶ 91. 241 Tr. of Sept. 12, 2025 Hr’g on Cross-Mots. to Compel (Dkt. 81) (“Cross-Mots. Hr’g Tr.”) 10, 23, 68-69. 242 See Fortis’s Pre-trial Br. (Dkt. 122) (“Pl.’s Pre-trial Br.”); Krafton’s Pre-trial Br. (Dkt. 121) (“Def.’s Pre-trial Br.”). 243 See Fortis’s Post-trial Br. (Dkt. 149) (“Pl.’s Post-trial Opening Br.”); Krafton’s Post- trial Br. (Dkt. 154) (“Def.’s Post-trial Br.”); Fortis’s Post-trial Reply Br. (Dkt. 156) (“Pl.’s Post-trial Reply Br.”). 244 See Kuroda v. SPJS Hldgs., L.L.C., 971 A.2d 872, 883 (Del. Ch. 2009). 245 Revolution Retail Sys., LLC v. Sentinel Techs., Inc., 2015 WL 6611601, at *9 (Del. Ch. Oct. 30, 2015) (“Proof by a preponderance of the evidence means proof that something is more likely than not.”); In re Coverdale, 1987 WL 758002, at *3 (Del. Ch. Aug. 3, 1987) 42 a preponderance of the evidence that its terminations were for Cause or that it was

otherwise justified in assuming operational control.

I find in Fortis’s favor. The Key Employees were not terminated for Cause as

defined in the EPA and thus retained operational control of Unknown Worlds. None

of Krafton’s proffered justifications have merit. To remedy Krafton’s breaches, I

grant a tailored specific performance remedy outlined in Section III below.246

A. Whether the Founders Were Terminated for Cause

A central inquiry in Phase One is whether Krafton’s termination of the Key

Employees breached the EPA. The EPA sets strict parameters around Krafton’s

ability to remove the Key Employees. Krafton’s right to terminate them hinges on

whether it had “Cause” to do so.

The EPA defines “Cause” as:

(i) an intentional act of fraud or dishonest[y] in connection with his or her duties, or in the course of his or her employment with the Company, (ii) his or her conviction of a felony or a plea of “guilty” or “no contest” to a felony; (iii) a willful act or omission by such individual that constitutes gross misconduct and that is injurious to the Company, or (iv) his or her intentional, wrongful disclosure of trade secrets or confidential information of the Company; provided that no act or omission shall be considered “willful” unless committed without good faith and

(“The burden of proof in civil cases in Delaware is typically one of preponderance of the evidence . . . .” (citation omitted)). 246 See infra Section III. 43 without a reasonable belief that the act or omission was in the Company’s best interest.247

The parties agree that only the first definition is at issue. Krafton does not

argue that the Key Employees’ actions constituted “gross misconduct” or a

“wrongful disclosure of trade secrets.”248 Nor does Krafton address whether the Key

Employees committed fraud. 249 Accordingly, I focus my analysis on whether the

Key Employees engaged in an “intentional act of . . . dishonesty.”250

1. The Meaning of “Cause”

An agreement’s express terms provide the starting point in a contract dispute.

“Delaware [law] adheres to the ‘objective’ theory of contracts,” meaning that “a

contract’s construction should be that which would be understood by an objective,

reasonable third party.”251 When interpreting a contract, the court must ascertain the

247 EPA § 1.1 (defining “Cause”); see id. at Preamble (defining “Company” as Unknown Worlds). The definition contains a typo: “dishonesty” is written as “dishonestly.” I use the correct term “dishonesty” in this decision when citing to the definition of Cause. 248 At post-trial argument, I asked whether Krafton’s allegations might implicate other portions of the definition—namely, “a willful act or omission by such individual that constitutes gross misconduct and that is injurious to the Company.” Post-trial Arg. Tr. 19-20. Counsel for both parties argued that this clause invokes a more severe sort of misconduct not at issue here, particularly given the proviso defining “willful.” Id. at 20, 106-07. 249 Id. at 106-07 (explaining that subsection (i) requires “actual fraud or intentional dishonesty,” then describing the Key Employees’ acts suggesting the latter); Def.’s Pre-trial Br. 41-50 (arguing that the Key Employees engaged in various intentional acts of dishonesty). 250 EPA § 1.1. 251 Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010). 44 parties’ intent based on the four corners of the agreement.252 Absent ambiguity,

Delaware courts will not distort contract language under the guise of construing it.253

To that end, the court “will give each provision and term effect” to avoid rendering

any part of the contract mere surplusage. 254 For terms not defined in a contract, the

court “look[s] to dictionaries for assistance in determining the[ir] plain meaning.”255

The phrase at issue is an “intentional act of . . . dishonesty.”256 The concept

of “dishonesty” generally involves a lack of honesty, a disposition to defraud or

deceive, or the telling of a falsehood to cause the other party to rely on the resulting

misimpression.257 For the modifier “intentional” to have independent meaning, it

must elevate the required level of intent above that demanded by “dishonesty”

252 Salamone v. Gorman, 106 A.3d 354, 367-68 (Del. 2014). 253 See Alta Berkeley VI C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012); City Investing Co. Liq. Tr. v. Cont’l Cas. Co., 624 A.2d 1191, 1198 (Del. 1993) (“If a writing is plain and clear on its face, i.e., its language conveys an unmistakable meaning, the writing itself is the sole source for gaining an understanding of intent.”). 254 Osborn, 991 A.2d at 1159 (citing Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 397 (Del. 2010)). 255 Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 739 (Del. 2006). 256 See supra note 247 and accompanying text. 257 See Dishonesty, Merriam-Webster, https://www.merriam-webster.com/ dictionary/dishonesty (last visited Mar. 1, 2026) (defining “dishonesty” as “lack of honesty or integrity: disposition to defraud or deceive”); see also Dishonesty, Black’s Law Dictionary (12th ed. 2024) (defining “dishonesty” as “[d]eceitfulness as a character trait; behavior that deceives or cheats people; untruthfulness; untrustworthiness”); In re Lyle, 74 A.3d 654, 2013 WL 4543284, at *7 (Del. Aug. 23, 2013) (TABLE) (stating that “dishonesty[] . . . requires a ‘conscious objective or purpose to accomplish’” a given act); Matter of Beauregard, 189 A.3d 1236, 1247 (Del. 2018) (explaining that the term “dishonesty . . . impl[ies] a state of mind requirement”). 45 alone.258 “Intentional” is commonly defined as an act “[d]one with the aim of

carrying out the act.”259

Accordingly, an “intentional act of dishonesty” requires more than an

inaccurate statement or an objectively unauthorized action. To establish Cause,

Krafton must prove that a Key Employee acted with the conscious objective to

deceive it. This interpretation aligns with the Cause definition’s structure, which

lists fraud, felonies, gross misconduct, and wrongful disclosure of trade secrets—

each involving serious culpable conduct.260 Reading “dishonesty” to encompass

inaccuracies or unauthorized acts would expand Cause beyond the narrow grounds

the parties negotiated.261

258 Osborn, 991 A.2d at 1159 (outlining the rule against surplusage). If the EPA had used “dishonesty” alone, that could embrace conduct short of “intentional dishonesty.” See, e.g., Nat’l Newark & Essex Bank v. Am. Ins., 385 A.2d 1216, 1222 (N.J. 1978) (holding that “dishonest” on its own has a “broad scope,” including “breach of trust” or even “manifestly unfair” acts). Because the parties chose to include the term “intentional” to modify “dishonesty,” I cannot read the term “intentional” out of the contract. 259 See Intentional, Black’s Law Dictionary (12th ed. 2024) (also defining “intentional” as “performed or brought about purposely by someone who is aware”). 260 EPA § 1.1. 261 See PJT Hldgs., LLC v. Costanzo, 339 A.3d 1231, 1248 (Del. Ch. 2025) (explaining that when a contract uses established legal terminology like “fraud,” courts presume the parties intended its common-law meaning, which requires an “intentional perversion of truth for the purpose of inducing another in reliance upon it” (quoting Desert Equities, Inc. v. Morgan Stanley Leveraged Equity Fund, II, L.P., 624 A.2d 1199, 1208 n.16 (Del. 1993))). 46 Krafton advocates for a broader reading. It contends that “intentional” does

not require an intent to deceive.262 In Krafton’s view, Cause exists if the act is

deliberate, regardless of the actor’s subjective purpose.263

Krafton’s interpretation is unsupported. The cases Krafton relies upon—

Wyant v. State and Hexion Specialty Chemicals, Inc. v. Huntsman Corp.—are

inapposite. Wyant addressed statutory criminal intent, which is irrelevant to a

negotiated term in a commercial contract.264 Hexion is equally unhelpful. There,

the court construed the phrase “knowing and intentional breach” and held that a party

need only take a deliberate act that results in a breach, regardless of the actor’s

intent.265 A breach of contract, however, can occur without any intent to do so.

Dishonesty cannot. Because dishonesty inherently requires a deceptive state of

mind, an “intentional act of dishonesty” means that the deception itself must be the

actor’s specific aim.266 I next consider whether the Key Employees engaged in such

an act.

See Def.’s Post-trial Br. 50 (citing Wyant v. State, 519 A.2d 649 (Del. 1986), and Hexion 262

Specialty Chems., Inc. v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008)). 263 Id. 264 Wyant, 519 A.2d at 659. 265 Hexion, 965 A.2d at 746-48. 266 See Pacific Ins. v. Higgins, 1992 WL 212601, at *5 & n.3 (Del. Ch. Sept. 2, 1992) (providing that, in other contexts, “it has been held that subjective intent is an element of ‘dishonesty’” and finding that, “if subjective intent [is] essential for a finding of ‘dishonesty’ it [was] undeniably present” (collecting cases)); see also Stargatt v. Avenell, 434 F. Supp. 234, 243 (D. Del. 1977) (construing “dishonest” in a contract as implying the 47 2. Failure to Prove “Intentional Dishonesty”

Krafton advances two rationales for the terminations: (1) that the Key

Employees “engaged in intentional acts of dishonesty to keep Krafton in the dark

about Cleveland and McGuire’s abandonment of their roles”; and (2) the Key

Employees’ downloads of confidential Unknown Worlds information. 267

Neither constitutes an intentional act of dishonesty. The role changes were

transparent maneuvers rather than deliberate acts of deception. The data downloads

were protective measures, lacking the requisite intent to deceive.

a. The Role and Salary Changes

Krafton submits that, after Moonbreaker’s commercial failure, the Founders

effectively abandoned their game development roles at Unknown Worlds.268

Cleveland stopped making games, reducing his involvement with the studio to four

hours per week on filmmaking.269 McGuire similarly withdrew from his technical

duties to focus on social responsibility initiatives.270 Though Gill continued to run

deliberate telling of a falsehood with the intention that the other party rely on the resulting misimpression). 267 See Def.’s Pre-trial Br. 40 (focusing on role abandonment and data downloads); see also JX 1073 (Krafton’s Resps. and Obj. to Pl.’s First Set of Interrogs.) 4, 14, 23-24. Krafton’s justifications at trial were a departure from the original basis it listed for termination, which was game readiness. See JXs 954-56 (termination notices). 268 Def.’s Post-trial Br. 11-13. 269 Id. at 42-43; see also Cleveland Tr. 804. 270 Def.’s Post-trial Br. 12-13, 16-17; see also JX 476 at 2. 48 the business, Krafton accuses him of covering for Cleveland and McGuire to

preserve operational control and protect the earnout.271 In Krafton’s view, this

collective abandonment of responsibilities and concealment of the Founders’

functional retirements amounted to “intentional act[s] of dishonesty” under the

EPA.272

This theory fails because the Founders transparently communicated their

transition away from their original roles publicly, internally, and directly to Krafton’s

senior personnel. Krafton’s contemporaneous knowledge and consent foreclose any

finding of deceit.

Krafton concedes that it “knew that the Founders’ titles changed in 2024.” 273

But it insists it “did not know that those title changes masked diminishing roles and

responsibilities for Cleveland and McGuire.”274 Not so. Krafton learned about the

limited scope of their roles, including on the Subnautica franchise, long before the

terminations.

Krafton admitted in its answer to Fortis’s complaint that “Cleveland had

abandoned video games to pursue filmmaking, a process he documented publicly on

271 Def.’s Post-trial Br. 15-18. 272 Id. at 44, 50. 273 Id. at 50. 274 Id. 49 his website and social media.”275 Indeed, Cleveland was open with the world about

his pivot from video games to filmmaking. 276 Some of these public statements, such

as podcasts, were sent directly to Park and Kim. 277

Krafton was kept directly apprised of these changes. As early as February

2024, Gill told Park that Cleveland “w[ould] not be working directly on

[Subnautica 2],” and Park was “to manage expectations” with Krafton. 278 Park then

told Kim that Cleveland had been “focusing heavily on film projects lately,” and

Kim said Krafton’s Chairman had “suggested officially recognizing Charlie’s film

project, considering it could provide valuable experience to [Krafton].”279 She also

told Kim that Charlie was “personally funding a Christmas movie,” which might be

a “beneficial experience for the company,” and that Krafton did not “intend to hinder

his Hollywood involvement.”280 In March 2025, Park expressed similar excitement

275 Answer 3-4. 276 See JX 566 (Abyssal website); JX 570 (podcast); JX 573 (podcast); JX 844 (Instagram); JX 845 (LinkedIn); JX 846 (X post). 277 See JX 602A; JX 605; JX 1331 at 2-3. 278 JX 394 at 3; see also JX 508A at 6 (Oliveira telling Park in August 2024 he was not “overly concerned even if Charlie takes a break for now and only continues his roles in media and as a Subnautica IP advisor” (emphasis added)). 279 JX 1245 at 17-18, 45. 280 JX 1245A at 45; see also JX 561 (Cleveland telling Park in November 2024 that things were “moving slowly but surely with the Subnautica film” and that he had “another film project on the side—a Christmas movie that’s a spiritual sequel to Elf” (emphasis added)); see Park Tr. 464-66, 538-40. 50 about Cleveland’s other projects, saying the “zombie movie [he was] writing” had

“potential to be a great film,” or even “a game.” 281 Cleveland discussed his other

film projects at length with Kim. 282

McGuire’s shift was far less public. But it, too, was known to Krafton.

Krafton highlights as deceitful a July 2024 Slack message where Gill told Park that

McGuire would step down from management to “focus purely on tech and R&D.”283

Whatever Gill’s initial framing, the record shows Krafton understood McGuire had

transitioned toward social impact work. In December 2024, for example, Oliveira

emailed a group including Gill and Park about collaborating “on social responsibility

initiatives.”284 The meeting would address “ways Krafton can support Max’s new

projects . . . studying the impact of our games on individuals and society, as well as

exploring how games can be leveraged to address social challenges and issues.”285

As for Gill, no coverup was executed. Krafton points to his July 2024 Slack

message to Park that “nothing is changing” as providing false assurances. 286 Read

in context, Gill was simply explaining how the new titles formalized a transition that

281 JX 1331 at 2. 282 JX 730A; Cleveland Tr. 743-44. 283 JX 471 at 3. 284 JX 591 at 4. 285 Id. 286 Def.’s Post-trial Br. 50-53. 51 had happened months prior. He clarified that “Charlie wasn’t doing anything on the

studio operations side, at all.”287 Park understood, replying that there was “not really

much change . . . but simply about the title changes that more clearly represent the

actual roles.”288 Gill then communicated the “responsibility changes” to Krafton and

Unknown Worlds.289 He informed Krafton’s finance department of the title changes,

and updated Unknown Worlds’ internal human resource systems—to which Krafton

had full access—to reflect the Founders’ reduced salaries.290 Krafton’s internal

communications showed its understanding that “Ted reduced Max and Charlie’s

compensation to 100k from 384k” by early June 2025. 291

Cleveland and McGuire abdicated the game development duties they held

when Krafton acquired Unknown Worlds. But they were not dishonest about it.

Whether Cleveland or McGuire violated an unwritten expectation by working fewer

hours as at-will employees is not before me. Because the Founders were

forthcoming about their shifts away from game making to reduced roles and salaries,

287 JX 471; see Gill Tr. 57. 288 JX 471; Park Tr. 498. 289 JX 478 at 1 (explaining McGuire was “Special Projects Director, working on initiatives that fall outside [the studio’s] main development activities” and Cleveland was “Franchise Creative Director,” with a “focus on Subnautica, exploring TV and film opportunities” (emphasis added)); see JX 496 at 4. 290 Gill Tr. 170-71; id. at 70-71 (testifying salary changes were tracked in the HR system accessed by Krafton); see JX 490 at 1; JX 803A (Unknown Worlds HR spreadsheet). 291 JX 827; see also Yoon Tr. 623-24 (acknowledging that Yoon learned of the Key Employees’ salary reductions by early June 2025). 52 there was no deception, no coverup, and no intent to mislead. The role changes do

not constitute Cause.

b. The Data Downloads

Krafton’s second justification centers on the Key Employees’ actions shortly

before their discharge. In late June 2025, as relations with Krafton rapidly

deteriorated, the Key Employees downloaded large volumes of Unknown Worlds’

data to personal devices.292 The files included source code, legacy game files, and

internal communications. 293 Krafton claims that these unauthorized extractions of

confidential information constituted terminable offenses.294

Krafton did not meet its burden on this defense. Although the data downloads

were wrongful, they were a response to an escalating corporate emergency. The Key

Employees lacked the conscious objective to deceive required for a for-Cause

termination.

Fortis attempts to justify the conduct by arguing that the Key Employees had

an “absolute right”—as senior executives and Board members—to access and retain

this corporate data under Unknown Worlds’ bylaws and the EPA.295 This argument

292 See supra Section I.R. 293 See supra Section I.R. 294 Def.’s Post-trial Br. 56-58. 295 See JX 1185 (Bylaws) § 8.5 (giving the Key Employees an “absolute right” to copy Unknown Worlds documents); EPA § 10.3; see also Pl.’s Post-trial Opening Br. 47; Pl.’s Post-trial Reply Br. 28-30. 53 is unpersuasive. The Key Employees were not seeking to inspect books and records

or gather information in the ordinary course of their duties. They executed a bulk

extraction to protect the data itself.

This mass download of corporate data was wrong. Yet general notions of

wrongfulness or IT policy violations cannot substitute for the language of the EPA.

Krafton agreed to limit its termination rights to an “intentional act

of . . . dishonesty.”296 As previously established, intentional dishonesty requires a

specific aim to deceive.297

Krafton did not prove that the downloads meet this high bar. The Key

Employees’ actions were misguided, but driven by a good faith, defensive motive.

By late June 2025, Krafton had commandeered the Unknown Worlds website and

the Steam platform to block the release of Subnautica 2, and was threatening a

broader takeover. 298 The Key Employees genuinely and reasonably feared that they

were about to be locked out of the studio’s systems. Gill credibly testified that the

Key Employees downloaded the data to guard “Unknown Worlds, Inc., in protecting

296 EPA § 1.1. I cannot “circumvent the for-cause contractual predicate for which [the Key Employees] bargained” for in the EPA by justifying termination “for any reason unearthed after the fact.” A&J Cap., Inc. v. L. Off. of Krug, 2019 WL 367176, at *11 n.128 (Del. Ch. Jan. 29, 2019), aff’d, 222 A.3d 143 (Del. 2019) (TABLE). 297 See supra notes 257, 266 (explaining the meaning of “dishonest”); supra Section II.A.1; see also Def.’s Post-trial Br. 50 (citing Hexion, 965 A.2d at 746-48). 298 See supra notes 199-208; see also Gill Tr. 105-06, 109-113; McGuire Tr. 257-258. 54 the company and the team.”299 Cleveland echoed that they needed to “defend the

company” from a hostile parent.300

Critically, the Key Employees did not loot the company to enrich themselves,

steal data to form a competing venture, or sell secrets to a rival. 301 They kept the

materials confidential and returned them promptly after their terminations.302 These

are not the actions of thieves.303

299 Gill Tr. 115. To the extent Krafton argues this “protection” was nefarious because it included potentially self-publishing the game, that argument is not compelling. At a June 12, 2025 meeting, Kim admitted that self-publishing was “completely up to” the Key Employees. JX 860 at 27. Preserving a right one believes in good faith to have is not intentional dishonesty. 300 Cleveland Tr. 748. 301 See Def.’s Post-trial Br. 49 (citing Metro Storage Int’l LLC v. Harron, 275 A.3d 810, 879 (Del. Ch. 2022)). Metro Storage is distinguishable. The defendant there was terminated for cause after disclosing confidential information to a client-competitor before ultimately joining that competitor. Metro Storage, 275 A.3d at 823, 879. Krafton attempts to argue that the Key Employees misappropriated information to start a new company. But the “plans to ‘[s]tart a new company’” Krafton misleadingly references are the musings of an outsider. Def.’s Post-trial Br. 44; JX 1057 at 2; see Cleveland Tr. 756-58, 833-34 (testifying that the suggestion to “[s]tart a new company” in his notes were “what [his friend] said, not what [Cleveland] said”). There is no evidence the Key Employees considered doing so, and they made clear they had no such plans. See Cleveland Tr. 833- 34, 838; Gill Tr. 118; McGuire Tr. 257-58. 302 Gill Tr. 117-18; McGuire Tr. 258; Cleveland Tr. 749-51. Krafton asserts that Cleveland wrongfully deleted a “Prototype Design” file on July 2. Def.’s Post-trial Br. 33. But Fortis clarified at post-trial argument that any company files that were taken were ultimately returned. Post-trial Arg. Tr. 147; see also Cleveland Tr. 749. See Def.’s Post-trial Br. 57 (arguing that “theft is inherently an act of dishonesty” (citing 303

Manna v. State, 945 A.2d 1149, 1153 (Del. 2008))). 55 Krafton asserts that the conduct was deceitful because Gill made an evasive

statement to an IT administrator, claiming he was just “backing a few things up.”304

Although this statement was incomplete—Gill had downloaded tens of thousands of

files—it does not transform a protective download into a terminable act of

intentional deceit under the EPA.305 Krafton lacked independent Cause to terminate

the Key Employees for these acts.

3. Post-Termination Justifications

Krafton’s sole justification in its July 1, 2025 termination notices was the Key

Employees’ “intention to proceed with a premature release of Subnautica 2,” which

purportedly violated “obligations under Section 2(b) of the Employment

Agreement.”306 It repeated that basis in its answer to Fortis’s complaint. 307 During

304 Gill Tr. 115-17; JX 786. 305 See JX 1043 (stipulating McGuire downloaded 99,902 files and Cleveland downloaded 72,140 files); McGuire Tr. 257. 306 JXs 954-56 (termination notices) (asserting that the game “is not ready for release and will inflict long-term damage on the reputation of the game and franchise,” and citing alleged violations of “obligations under Section 2(b) of the Employment Agreement”). They do not say which of the many clauses in Section 2(b) were violated. See Employment Agreements § 2(b). In any event, a violation of Section 2(b) does not amount to Cause under the EPA. See infra note 375 and accompanying text. 307 Answer ¶ 91 (“As leaving the Key Employees in charge could bring irreversible damage to Unknown Worlds and Krafton due to the unprepared release of Subnautica 2, Krafton, who had been working with Unknown Worlds in good faith until the last possible moment, was left with no choice but to terminate the employment of these three Key Employees.”); see also Def.’s Opp’n to Pl.’s Mot. to Expedite (Dkt. 6) ¶¶ 3-5, 14-19. 56 the litigation, however, Krafton walked that back and pivoted to the two post hoc

reasons analyzed above.308

Even if Krafton’s newly proffered grounds met the contractual definition of

Cause, Krafton’s reliance on them would fail under the mend-the-hold and

after-acquired evidence doctrines. Delaware courts employ these doctrines to guard

against pretextual maneuvering by employers. They address related but temporally

distinct problems. The mend-the-hold doctrine limits a party’s ability to shift the

contractual justification for its conduct during litigation; the after-acquired evidence

doctrine addresses whether misconduct discovered after a termination can

retroactively justify the termination.309

If the employer knew of the ground before the firing but did not rely on it

during the termination, it is waived under the mend-the-hold doctrine.310 This

doctrine precludes a party from asserting new reasons in litigation once its original

308 See supra Section II.A.2; see also Cross-Mots. Hr’g Tr. 24-25 (Krafton’s counsel asserting that “game readiness is not relevant to phase one of this case” because it has “nothing to do with termination or operational control”). Although it still believes “Subnautica 2 was not ready for release,” it is not pressing game readiness as a basis for termination. Def.’s Post-trial Br. 47 n.22. 309 See PJT Hldgs., 339 A.3d at 1260 (distinguishing between justifications known before termination and those discovered after). 310 See id. at 1260 (explaining that the mend-the-hold doctrine “bars a party who rejects a contract on certain specified grounds from changing position after litigation is filed when those grounds for rejection do not pan out” (citation omitted)). 57 ones fail, preventing the use of seriatim justifications.311 Applied here, the mend-

the-hold doctrine bars Krafton from relying on conduct it was aware of before July 1

to justify the terminations.

For grounds discovered only after a termination, the employer must satisfy

the stringent requirements of the after-acquired evidence doctrine.312 As the United

States Supreme Court explained in McKennon v. Nashville Banner Publishing Co.,

an employer relying on after-acquired evidence must prove the later-discovered

conduct was “of such severity that the employee in fact would have been terminated

on those grounds alone if the employer had known of it at the time of the

discharge.”313 Under this doctrine, any misconduct Krafton discovered after July 1

must independently establish Cause to justify the terminations.

311 Id. at 1260-61 (noting that if a “terminating party knew about the justification before the termination and did not rely on it, then the party presumptively waived reliance on that justification by not citing it at the time of termination”); Harbor Ins. v. Cont’l Bank Corp., 922 F.2d 357, 362 (7th Cir. 1990) (describing mend-the-hold as a “common law doctrine that limits the right of a party to a contract suit to change his litigating position”); Liberty Prop. Ltd. P’ship v. 25 Mass. Ave. Prop. LLC, 2008 WL 1746974, at *14 (Del. Ch. Apr. 7, 2008) (same), aff’d, 970 A.2d 258 (Del. 2009). 312 See McKennon v. Nashville Banner Publ’g Co., 513 U.S. 352, 362-63 (1995) (“Where an employer seeks to rely upon after-acquired evidence of wrongdoing, it must first establish that the wrongdoing . . . .” (emphasis added)); O’Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 759 (9th Cir. 1996) (noting that the burden of proof rests on the employer). 313 513 U.S. at 362-63; see also Metro Storage, 275 A.3d at 879 (applying the McKennon framework); Davenport Gp. MG, L.P. v. Strategic Inv. P’rs, Inc., 685 A.2d 715, 723 (Del. Ch. 1996) (same). Allowing the use of after-acquired evidence under these conditions comports with the understanding that “it is not bad faith to change one’s position 58 These doctrinal filters are consistent with the skeptical view courts take of

post-termination rationalizations.314 That skepticism is especially warranted where,

as here, an employer abandons its contemporaneous ground for termination and

advances different ones mid-litigation.315 Working from hindsight, an employer has

a “strong incentive not only to discover previously undisclosed wrongdoing on the

part of the plaintiff, but also to conclude that that conduct would in fact have resulted

in the plaintiff’s immediate discharge.”316

The doctrines support rejecting Krafton’s shifting defenses. The role change

justification is waived under the mend-the-hold doctrine, and the data downloads fail

to independently establish Cause as required by the after-acquired evidence doctrine.

a. Waiver of the Role Change Justification

The after-acquired evidence doctrine permits Krafton to rely on the role

changes if it “learned about [them] after the termination.”317 Krafton cannot satisfy

on the basis of information that could not have been acquired earlier.” Harbor Ins., 922 F.2d at 364. 314 Cf. PJT Hldgs., 339 A.3d at 1261; O’Day, 79 F.3d at 759 (applying the McKennon standard in the employment discrimination context and noting the need for courts to view employer assertions with skepticism). 315 See PJT Hldgs., 339 A.3d at 1261 n.153 (explaining that when a party “hokes up a phony defense” and then tries on another for size, they “can properly be said to be acting in bad faith” (citing Harbor Ins., 922 F.2d at 363)). 316 O’Day, 79 F.3d at 762. 317 PJT Hldgs., 339 A.3d at 1260; see also McKennon, 513 U.S. at 362 (“Once an employer learns about employee wrongdoing that would lead to a legitimate discharge, we cannot require the employer to ignore the information, even if it is acquired during the course of 59 that foundational requirement. As discussed above, it was fully aware of the

Founders’ reduced roles, salaries, and titles changes by at least May and June of

2025—weeks before issuing the July 1 termination notices.318 The after-acquired

evidence doctrine therefore cannot be used to revive the justification.319

Instead, the mend-the-hold doctrine applies.320 Krafton chose to rely

exclusively on game readiness in its termination notices despite its awareness of the

role changes. Now, it cannot resurrect those changes to manufacture Cause in this

litigation.321

Regardless, Krafton’s argument fails on the merits. To succeed, Krafton must

prove that the role and salary reductions “independently support[ed] termination.”322

discovery in a suit against the employer and even if the information might have gone undiscovered absent the suit.”). 318 See JX 1073 at 26 (Krafton interrogatory responses admitting it “discovered” these grounds in “May and June 2025”); Kim Tr. 404 (testifying Cleveland told him in May he was “no longer involved in Subnautica at all”); see also supra Section II.A.2.a. 319 See supra notes 310-311 and accompanying text; PJT Hldgs., 339 A.3d at 1260 (“Reliance on after-acquired evidence is most persuasive when the terminated party concealed the evidence.”); see also Tatum v. Fairstead Affordable LLC, 2023 WL 8923400, at *4 (Del. Ch. Dec. 22, 2023) (noting that the after-acquired evidence doctrine does not “authorize an employer to learn about misconduct, make a business decision not to act on it . . . then reverse course months later”). 320 See supra note 310 and accompanying text; PJT Hldgs., 339 A.3d at 1260. 321 PJT Hldgs., 339 A.3d at 1260-61. 322 Id. at 1260. 60 The EPA requires Krafton to do so by showing the changes constituted “intentional

act[s] of . . . dishonesty.”323 As analyzed above, Krafton failed to meet that burden.324

b. Failure of the Download Justification

Krafton discovered the data downloads after the July 1 terminations, placing

it within the after-acquired evidence doctrine.325 But Krafton’s defense still fails. It

has not proven that the data downloads constitute an independent basis for

Fortis states that the after-acquired evidence doctrine is inapplicable because

Krafton knew about the downloads before July 1.326 This argument relies on the

testimony of Richard Yoon, Krafton’s Head of Strategy and Operations, who initially

stated that Krafton personnel knew of the transfers by June 27.327 Yoon later clarified

323 See supra Section II.A.1 (explaining the meaning of “intentional act of dishonesty”). To prove an independent basis for termination, an employer must show the later-discovered conduct satisfies the specific standards in the parties’ agreement. See Metro Storage, 275 A.3d at 879, 881 (holding that the plaintiffs “argue persuasively that if they had known about [the defendant’s] outside consulting, then they would have terminated him for cause” because his conduct violated an employment agreement); see also A&J Cap., 2019 WL 367176, at *11 n.128 (“[W]hile Krug could supplement his for-cause basis for removal with additional evidence or causes for termination discovered after removal, he still was obliged to demonstrate that A & J had engaged in conduct . . . at the time of removal that would satisfy the standards for removal as laid out in the operative agreements.”). 324 See supra Section II.A.2.a. 325 See supra note 312 and accompanying text. 326 Pl.’s Post-trial Opening Br. 44. 327 Yoon Tr. 616. 61 that Krafton only learned of the downloads in July, once its IT team accessed

Unknown Worlds’ systems.328

I find Yoon’s corrected timeline credible. Krafton did not grasp the fact—

much less the scope—of the downloads until a post-termination forensic IT audit. 329

Though an Unknown Worlds IT administrator detected unusual network activity by

Gill in early June, her knowledge—as a mid-tier employee of a subsidiary—is not

imputed to Krafton.330 Krafton’s officers remained in the dark.

Because the after-acquired evidence doctrine applies, Krafton must show that

the data downloads would have resulted in the Key Employees’ discharge. 331 This

burden is two-fold. Krafton must first establish that the downloads supported

termination for Cause under the EPA.332 It must then prove that the conduct would

in fact have resulted in termination.333

328 Id. at 625 (explaining that Krafton learned later because Unknown Worlds’ systems were kept separate). 329 Def.’s Post-trial Br. 33, 49. 330 See 3 Fletcher Cyclopedia of the Law of Corporations § 807 (Sept. 2025 Update) (noting that while “[a] corporation will be deemed to have received notice of facts within the knowledge of officers responsible for informing the corporation of facts affecting its interests,” the “[k]nowledge of a mere employee of the corporation ordinarily is not imputed to the company”). 331 See McKennon, 513 U.S. at 362-63; see supra Section II.A.2 (explaining the requirements of the after-acquired evidence doctrine). 332 EPA § 1.1; see supra Section II.A.1. 333 O’Day, 79 F.3d at 759. 62 Krafton has done neither. As found above, the Key Employees’ actions were

protective measures, not intentional dishonesty.334 And even if the contractual

standard for Cause were met, Krafton failed to prove that it would have fired the

Key Employees over the downloads. The shifting, litigation-driven testimony of

Krafton’s executives at trial belies this narrative.

Krafton’s true focus in June 2025 was avoiding its financial exposure. It knew

Subnautica 2 was poised to achieve a $250 million earnout, which Kim viewed as a

catastrophic failure.335 Krafton undertook “Project X” to either force a deal on the

earnout or execute a “takeover” of the studio.336 Terminating the Founders was one

tactic explored and ultimately chosen by Krafton to accomplish its goal.

In early June, Park warned Kim that:

[I]t seems to be highly likely that the earn-out will still be paid if the sales goal is achieved regardless of the dismissal with cause. Therefore, there isn’t too much we can practically gain other than

334 See supra Section II.A.2.b. 335 E.g., JX 730A at 2 (Krafton notes of a May 21, 2025 meeting where Kim “noted that because of the earn-out and incentive scheme, granting them now could significantly reduce the studio’s book value—something he, as the person who was in charge of the investment, would have to be accountable for . . . [h]e questioned whether there’s even a need to rush the release”); JX 765A at 2-3 (Kim on June 1, 2025: “Everyone admits the contract was a bad deal, but the problem is that we keep being the fool even afterward. . . . When I said the company’s value was too low compared to what we paid, if Charlie had shown even a hint of remorse, I wouldn’t feel this way. But he’s just too selfish.”); JX 771 at ‘6378 (Park confirming that the earnout would exceed Unknown World’s enterprise value to Krafton). 336 See Kim Tr. 448-50; JX 917A; JX 934A; see JX 1189A at 2-3 (Kim’s ChatGPT-designed “Response Strategy to ‘No-Deal’ Scenario”). 63 punishment with a simple dismissal alone, whereas I am worried that we may be exposed to lawsuit and reputation risk.337

Kim responded with deep frustration, lamenting “this is a contract under which we

can only be dragged around.”338 Given this maneuvering, Krafton’s witnesses lacked

credibility when insisting they would have fired the leaders of a $500 million

acquisition solely over a data backup and an evasive statement to IT.

When an employer faces a contractual payout it wishes to avoid, it is heavily

“incent[ivized] to go rummaging through the employee’s history to find any reason

it can to announce that the termination was really for cause.”339 That is precisely

what happened here. Frustrated by the Key Employees’ refusal to forfeit operational

control and facing a nine-figure liability, Krafton went searching for a pretext.

This court of equity will not permit a party to use the after-acquired evidence

doctrine to fabricate Cause where the evidence shows the termination decision was

made for different reasons. The doctrine prevents a wrongdoer from profiting from

concealed misconduct. It does not grant an employer license to retroactively invent

grounds for termination.

337 JX 1188 at 2. 338 Id. at 3 (Kim to Park: “Now, chatgpt starts to answer that it difficult to cancel the earn-out. . . . If so, this is a contract under which we can only be dragged around.”). 339 Cf. Robinson v. Kelly Cable of N.M., LLC, 2025 WL 3516162, at *5 (Del. Ch. Dec. 8, 2025) (declining to apply the after-acquired evidence doctrine where the employer attempted to use it to avoid severance obligations years after a without-cause termination). 64 B. Whether the Founders Lost the Right to Operational Control

The next issue is whether Krafton validly seized operational control of

Unknown Worlds.340

The EPA provides that, “so long as any Key Employee is employed by the

Company,” the Key Employees are entitled to “maintain operational control” of

Unknown Worlds “in all material respects, including (for both existing and new

products) product roadmap, launch, planning, partnering, budgeting and employee

matters[.]”341 Because the Key Employees were not terminated for Cause, they

retained the right to control the studio’s operations unless Krafton had other grounds

to strip them of it.

The Key Employees’ operational control right is limited by three express

conditions. They must:

(A) operate [the] businesses only in the ordinary course of business and use commercially reasonable efforts to preserve the goodwill and organization of [the] business and the relationships with its users, distributors, publishers, suppliers, employees, independent contractors, and other business relations;

(B) not take any action set forth on Schedule II [to the EPA] without the prior consent of [Krafton] . . .[; and]

340 See PTO ¶¶ 116, 120. 341 EPA § 2.7(f) (emphasis added). 65 (C) maintain such operational control only to the extent it is reasonably exercised in good faith and in material compliance with applicable Law. 342

Krafton asserts that the Key Employees violated the ordinary course covenant,

certain Schedule II restrictions, and the good faith obligation. If Krafton cannot

prove that the Key Employees breached any of these conditions, then its seizure of

operational control breached the EPA.

1. The Ordinary Course Covenant

The EPA mandated that the Key Employees operate Unknown Worlds “in the

ordinary course of business,” defined as the “usual and ordinary course of such

Person’s business consistent with past custom and practice.” 343 In this context, the

“Person” whose operations are being measured is Unknown Worlds. 344 To retain

operational control, the Key Employees were required to conduct Unknown Worlds’

affairs in a manner “consistent” with the studio’s operations “before and after

342 Id. 343 Id. §§ 1.1, 2.7(f). 344 “Person” means “any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, other entity or governmental entity (whether non-U.S., federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof).” Id. § 1.1. 66 entering into the [EPA].”345 Delaware courts look to the target company’s historical

operations to assess its compliance with such a covenant.346

Krafton interprets this provision as requiring the Founders to continue leading

the development of Unknown Worlds’ games, regardless of their formal titles.347 It

invokes the unique vision the Founders brought to the studio, with Cleveland

designing each major video game release and McGuire handling technical

development.348 Without this “magical pair” at the helm of every project, Krafton

believes Unknown Worlds could not operate “consistent with past custom and

practice.”349

But an ordinary course covenant is assessed at the company level, not the

individual employee level.350 Nothing in the EPA required that Cleveland and

McGuire maintain the jobs they held when the acquisition closed.351 The authority

relied on by Krafton underscores this distinction.

345 AB Stable VIII LLC v. Maps Hotels & Resorts One LLC, 2020 WL 7024929, at *71 (Del. Ch. Nov. 30, 2020), aff’d, 268 A.3d 198 (Del. 2021). 346 See id. at *75-76. 347 Def.’s Post-trial Br. 39. 348 See supra Section I.B; Cleveland Tr. 762-63; McGuire 233-34; JX 2001 at 35-36. 349 Def.’s Post-trial Br. 41 (“The Founders were not ‘working at a Burger King’; they built and ran a game studio centered around ‘creative vision’ and technical implementation.” (citing JX 1076 at 110; Cleveland Tr. 692)). 350 Pl.’s Post-trial Opening Br. 12. 351 See supra notes 388-389. 67 In Level 4 Yoga, LLC v. Corepower Yoga, LLC, a franchisee was found to have

maintained the ordinary course during the COVID-19 pandemic, despite having

furloughed most of its employees and closed its studios. 352 That was so because the

franchisee adhered to its longstanding practice of following the franchisor’s

directions. The company’s past practice was assessed at a level of generality well

above operational specifics, and no violation was found despite “extraordinary”

disruption in the franchisee’s business.353

AB Stable VIII LLC v. Maps Hotels and Resorts One LLC, another busted deal

case, addressed both buyer approval rights and an ordinary course covenant. 354 The

breach in AB Stable involved a systemic shutdown of the company’s core, revenue-

generating operations. It did not turn on the daily schedules of individual executives.

Finally, in Ivize of Milwaukee, LLC v. Compex Litigation Support, LLC, the

court held that an ordinary course covenant was breached by the seller’s failure to

prevent a manager from dismantling the business.355 The manager planned a

competing business, solicited key sales personnel, diverted business, and stole or

2022 WL 601862, at *23-25 (Del. Ch. Mar. 1, 2022), aff’d, 287 A.3d 226 (Del. 2022) 352

(TABLE). 353 Id. at *25. 354 2020 WL 7024929, at *75-78. 355 2009 WL 1111179, at *9 (Del. Ch. Apr. 27, 2009). 68 destroyed records and equipment. 356 The court emphasized that the “normal and

ordinary routine of conducting business does not include destroying business assets

and planning to transfer the essence of the business to a competitor.” 357

Unknown Worlds historically functioned under a philosophy the Founders

called the “Unknown Worlds way.”358 As pitched to Krafton, this business model

relied on a flat, remote organizational structure and a “community-focused”

approach to game development.359 Rather than waiting years to release a finished

product, Unknown Worlds launched games in early access to gather player feedback

and iterate alongside its community.360

The studio’s past custom included the Founders delegating primary

development duties. When Unknown Worlds developed its most recent entry in the

franchise, Subnautica: Below Zero, Cleveland and McGuire did not lead the

356 Id. 357 Id. 358 McGuire Tr. 237 (describing the “Unknown Worlds’ way” as an “emphasis on iterative development, early access, a focus on the community, being open with them, and making bold and daring games”). 359 Gill Tr. 8-9 (discussing the pitch presentation highlighting the studio as “community- focused, early access-driven” and “fully remote”); id. at 21-22 (discussing the “remote working model” and “Simple & Flat Organization Structure”); JX 1095 (pitch presentation). 360 See Gill Tr. 12-13 (explaining early access and community-based game development); McGuire Tr. 237. 69 project.361 They entrusted leadership to another developer while they focused on

Moonbreaker, acting only in a limited advisory capacity.362

After the acquisition, the studio’s operations followed this same playbook.

The company maintained its remote, flat structure. 363 It released Moonbreaker into

early access in September 2022 and utilized community feedback to iterate on the

design.364 When it came to Subnautica 2, the team—autonomously from the

Founders—prepared for an August 2025 early access release to engage the

community, just as the studio had done for Below Zero.365 By the spring of 2025,

Subnautica 2 was on track for launch, with Krafton personnel acknowledging that

“the game is coming along well” and its “build quality . . . improved dramatically.”366

361 Cleveland Tr. 693-94 (“I didn’t design anything on Below Zero. I didn’t do any programming on it. I didn’t work on Below Zero at all.”); McGuire Tr. 236 (“I was never part of the core team . . . . I was not the lead on Below Zero . . . .”). 362 Cleveland Tr. 694; McGuire Tr. 236; Gill Tr. 43 (“[Cleveland] hadn’t worked on Subnautica: Below Zero directly. And we had this incredible team we built, purpose-built for making Subnautica 2.”). 363 See Gill Tr. 36 (“[W]e’re fully distributed and we all work remotely.”). 364 Cleveland Tr. 701 (“We had released Moonbreaker into early access after five years at the end of September ’22.”); McGuire Tr. 241. 365 Gill Tr. 75 (testifying they had settled on “the final date of August 14 of 2025”); id. at 78 (“[W]e were planning an early access release of Subnautica 2 . . . and we wanted to do it with the community at the center of it. We wanted them playing the game, sharing their feedback[.]”). 366 Park Tr. 569; JX 784A at 2; see also JX 984 at 1 (Unknown Worlds’ development director confirming that the studio had an “amazing game that is ready to launch”). 70 Krafton’s secondary argument—that the late-June data downloads violated

the ordinary course covenant—fares no better. Its attempt to analogize the

downloads to the misconduct in Ivize falls flat.367 In Ivize, employees engaged in a

systemic effort to destroy customer records and loot the company to launch a

competing venture.368 Here, the Key Employees executed a bulk download

defensively to protect records during a mounting corporate crisis.369 This isolated

incident does not amount to a failure to operate in the ordinary course.

Krafton cannot assemble a breach by conflating individual job duties with

company-wide operations. That the Founders changed their titles and worked fewer

hours, and the Key Employees downloaded large quantities of company data, does

not mean Unknown Worlds departed from its ordinary course. The studio continued

to design, develop, and prepare to publish games using its established business

model. Thus, Krafton has not shown a deviation from past custom and practice

under EPA Section 2.7(f)(i)(A).

367 See Def.’s Post-trial Br. 43-44. 368 Ivize, 2009 WL 1111179, at *9. 369 As discussed above, there is no credible evidence in the record that the Key Employees planned to launch a competing venture. See supra note 301. 71 2. The Section II Restrictions

Krafton next argues that the Key Employees breached two restrictions in

Schedule II of the EPA, giving it the right to assume operational control.370 It has

not proved a breach of either restriction.

a. Constructive Termination and Good Reason

Schedule II(vi) bars the Key Employees from taking “any action that is

reasonably likely to give rise to a claim of constructive termination/dismissal or a

claim to resign for ‘good reason’ . . . as to a Key Employee” without Krafton’s

consent.371 Krafton maintains that the Founders’ voluntary role and salary changes

violated this provision because they met the definition of “Good Reason” in the

Founders’ own Employment Agreements.372 It posits that these voluntary changes

created conditions for a “Good Reason” resignation, thereby breaching the EPA and

forfeiting operational control. 373

This argument involves considering the EPA alongside the Employment

Agreements. Contemporaneously executed contracts that are part of the same

transaction may be read together to understand the parties’ overall intent.374 But

370 Def.’s Post-trial Br. 36-37; Post-trial Arg. Tr. 86. 371 EPA Schedule II(vi). 372 Def.’s Post-trial Br. 37. 373 Id. 374 See Comerica Bank v. Glob. Payments Direct, Inc., 2014 WL 3567610, at *7 (Del. Ch. July 21, 2014) (describing the “rule that contemporaneous contracts between the same 72 Krafton pushes this principle too far, conflating the distinct purposes of the

agreements.375

The Employment Agreements’ “Good Reason” provision protects the

employee from unilateral, adverse changes to his employment status.376 It creates a

right to resign and collect severance.377 A “claim” for “constructive termination” or

“good reason” as outlined in Schedule II, by contrast, refers to actions by an

employer that are tantamount to firing an employee. 378 That is, Schedule II(vi)

parties concerning the same subject matter should be read together as one contract”); see also Restatement (Second) of Contracts § 202(2) (A.L.I. 1981) (“A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.”). 375 See Ascension Ins. Hldgs., LLC v. Underwood, 2015 WL 356002, at *4 (Del. Ch. Jan. 28, 2015) (noting that concluding a purchase agreement and an employment agreement should be read together “begins, not ends, the analysis” because “by their very nature, the restrictions . . . in the purchase agreement and the employment agreement are different” (quoting Fillpoint, LLC v. Maas, 208 Cal. App. 4th 1170, 1182-83 (2012))); cf. RWI Acq. LLC v. Todd, 2012 WL 1955279, at *7 n.51 (Del. Ch. May 30, 2012) (observing that “[a]lthough[] ‘in construing the legal obligations created by [a] document, it is appropriate for the court to consider . . . the language of contracts among the same parties executed or amended as of the same date that deal with related matters’ . . . this principle of contractual interpretation ‘does not mean that the provisions of one instrument are imported bodily into another, contrary to the intent of the parties’” (first quoting Crown Books Corp. v. Bookstop, Inc., 1990 WL 26166, at *1 (Del. Ch. Feb. 28, 1990); and then quoting 11 Williston on Contracts § 30:26 (4th ed., rev. vol. 2011))). 376 Employment Agreements §§ 6(c), 7(b); see also Pl.’s Post-trial Reply Br. 12 (arguing that the “Good Reason” provision protects the Key Employees and cannot be used defensively by Krafton). 377 Employment Agreements §§ 6(c), 7(b). 378 Eastburn v. Del. Dep’t of Transp., 2009 WL 3290809, at *5 & n.7 (Del. Super. Sept. 21, 2009) (stating that “[c]onstructive termination refers to a resignation under intolerable work circumstances”); Rizzitiello v. McDonald’s Corp., 868 A.2d 825, 832 (Del. 2005) (noting that to “establish a constructive discharge, the plaintiff was required to show ‘working conditions so intolerable that a reasonable person would have felt 73 prevents the Key Employees, as managers, from taking hostile actions against each

other that would lead to a lawsuit or resignation with benefits.

Krafton’s attempt to apply this restriction to the Founders’ own voluntary role

changes is commercially unreasonable. 379 The Founders did not—and could not—

create a constructive termination claim against themselves by voluntarily reducing

their own salaries or modifying their own duties. Because the Founders never

asserted such claims and remained employed, their conduct did not implicate

Schedule II(vi).

b. Hiring New Executives

Krafton also argues that when the Founders stepped back, they created a

leadership void and had to replace themselves.380 It believes that this process

involved the hiring and replacement of “executive-level” employees, which required

Krafton’s consent under Schedule II(vii).381 Since consent was neither sought nor

given, Krafton asserts that the Key Employees breached Schedule II, permitting

Krafton to take operational control of Unknown Worlds.

compelled to resign’” (citation omitted)). In line with this understanding, the EPA equates “constructive termination” with “dismissal.” EPA Schedule II(vi). 379 See JX 1304 (Expert Report of Ryan Bubb) ¶¶ 176-78 (explaining that the ordinary course covenant and Schedule II restrictions function to limit extraordinary actions while preserving the sellers’ broad operational discretion over core business domains); see also Bubb Tr. 874-75. 380 See Def.’s Post-trial Br. 37, 42; see also Post-trial Arg. Tr. 86, 98-100. 381 Def.’s Post-trial Br. 37, 42; see EPA Schedule II(vii). 74 This argument is meritless. The EPA grants the Key Employees operational

control over “employee matters” and product development. 382 Although Schedule

II restricts unilateral changes to the company’s executive officers, the Founders did

no such thing. The individuals elevated to lead specific game projects—such as

Kalina and Gallegos—were neither appointed as corporate executives nor

designated Key Employees in the EPA.383 They were game developers taking on

project-level leadership. 384 Assigning these individuals to manage game

development was a routine personnel decision that fell squarely within the Key

Employees’ retained operational control and did not require Krafton’s consent.

3. The Good Faith Obligation

Section 2.7(f)(i)(C) of the EPA conditions the Key Employees’ right to

operational control on it being “reasonably exercised in good faith and in material

compliance with applicable Law.” 385 Krafton contends that the Key Employees

breached this obligation when Cleveland and McGuire reduced their working hours

382 EPA § 2.7(f). 383 Id. § 1.1 (identifying only Cleveland, McGuire, and Gill as “Key Employee[s]”). 384 See Gill Tr. 17, 25, 38, 76, 78; Cleveland Tr. 694, 701, 718-20 (describing Kalina and Gallegos’s promotions to game directors). 385 EPA § 2.7(f)(i)(C). 75 and altered their duties.386 Viewing the good faith condition through a “fiduciary

lens,” Krafton avers that stepping back from game development to focus on side

projects constituted bad faith. 387

This argument amounts to an attempt to inject a post-closing employment

lock-up into the EPA. Contrary to Krafton’s belief, 388 the EPA did not obligate the

Founders to remain in their exact pre-acquisition roles indefinitely. They were free

to leave, as shown by the EPA vesting operational control in the Key Employees so

long as any one of them was employed.389

Cleveland and McGuire lacked ill intent when they transitioned their roles.

Cleveland was burned out after Moonbreaker, and McGuire felt out of touch in an

organization that had outgrown him.390 Krafton frames their transition as a bad faith

scheme to collect the earnout, pointing to Gill’s encouragement that McGuire reduce

his hours and “stay on the books” rather than resign outright.391 But even if Gill

386 Def.’s Post-trial Br. 10, 35-38. Krafton also argues that the data downloads breached this provision. As discussed above, the downloads were problematic but executed with the good faith belief that the Key Employees were protecting the company. 387 Post-trial Arg. Tr. 99-100 (arguing for a “fiduciary lens” and asserting that Cleveland “get[ting] away with four hours on a film” was not in good faith). 388 Kim Tr. 435-36 (testifying that he “thought the earnout period would be the lockup period” requiring Cleveland to be the Creative Director and McGuire to be the Technical Director). 389 See EPA § 2.7(f); see also supra note 341. 390 See supra notes 102-110, 120-124. 391 Def.’s Post-trial Br. 10, 37-38; see JX 565 (McGuire’s journal). 76 were acting with an eye toward preserving the earnout, Krafton has not shown that

he acted in bad faith.

It is true that Gill reminded the Founders about the earnout while encouraging

them to stay with Unknown Worlds. The EPA did not, however, eliminate the

earnout if both Founders left. Their voluntary departures would merely reduce the

revenue credited toward the earnout calculation by $1 million each. 392 Given

Unknown Worlds’ strong projections for Subnautica 2, this $2 million adjustment

would have had a minor effect on the earnout.393

More broadly, it is reasonable for a CEO to encourage founders to transition

into reduced advisory roles rather than departing. This arrangement allowed

Cleveland and McGuire to retain ongoing ties to the company they created. They

could serve the studio in different capacities—films for Cleveland, social impact for

McGuire—while continuing to mentor the team.394

392 EPA Ex. B § 1(f) (“In the event that the employment of any Key Employee with the Group Companies or any of their Affiliates is terminated voluntarily by any Key Employee, Group Company Revenue for purposes of any calculation under Section 2. 7 of the Agreement will be reduced by an amount equal to $1,000,000.”). 393 See JX 690A; JX 1199A; see also Gill Tr. 47 (describing the $1 million adjustment per Key Employee as about “2.5 percent of the deal” if both Cleveland and McGuire departed); JX 1304 (Expert Report of Ryan Bubb) ¶¶ 244–45 (calculating that a $1 million reduction for a departed Key Employee would reduce the maximum $250 million earnout payment by at most 1.3%). 394 See Cleveland Tr. 700-01, 728-29; McGuire Tr. 335-36. 77 Openly transitioning duties to avoid the Founders’ departures is not bad faith.

A contractual “good faith” clause guards against arbitrary or unreasonable conduct

intended to deprive the counterparty of the fruits of the bargain. 395 Krafton, having

not contracted for an employment lock-up, suffered no such deprivation.

* * *

Krafton failed to prove that the Key Employees breached the ordinary course

covenant, the Schedule II restrictions, or the good faith obligation. It therefore

lacked a valid contractual justification under Section 2.7(f) to remove their

operational control. By nonetheless doing so while the Key Employees remained

validly employed, Krafton breached the EPA.

III. REMEDY

Krafton breached the EPA by terminating the Key Employees without Cause

and wrongfully usurping operational control of Unknown Worlds. Fortis seeks

specific performance of the EPA regarding the Key Employees’ employment and

395 Hexion, 965 A.2d at 749, 761 & n.125. 78 operational control. I first address the availability of specific performance before

turning to the proper scope of relief.

A. Whether Specific Performance Is Warranted

Fortis requests specific performance to restore the Key Employees to their

employment, board seats, and operational control of Unknown Worlds. 396 In the

EPA, Krafton guaranteed the Key Employees would retain operational control “in

all material respects” during “the Relevant Period.” 397 This operational control,

Krafton promised, would include “product roadmap” and “launch.”398 Krafton also

agreed that if it breached the EPA, the Key Employees would be entitled to specific

performance to “enforce compliance” with its terms.399

Krafton argues that Fortis must make a “clear and convincing showing” of its

entitlement to specific performance. 400 That is often the case. But where, as here,

the parties contracted for specific performance, Delaware courts will enforce their

396 PTO ¶ 122. 397 EPA § 2.7(f) (promising operational control during the “Relevant Period”); id. § 1.1 (defining “Relevant Period” as “the four complete and consecutive calendar quarters during the Testing Period with the highest amount of total Group Company Revenue over such four complete and consecutive calendar quarters”); id. (defining “Testing Period” as “the period following the Closing through December 31, 2025”). 398 Id. § 2.7(f). 399 Id. § 11.2 (stipulating that “the parties will be entitled to . . . specific performance . . . to prevent or restrain breaches or threatened breaches of this Agreement”). 400 Def.’s Post-trial Br. 58 (quoting 26 Cap. Acq. Corp. v. Tiger Resort Asia Ltd., 309 A.3d 434, 464 (Del. Ch. 2023)). 79 bargain unless the breaching party presents a “persuasive” and “case-specific”

reason not to.401

Even with a contractual stipulation, specific performance remains a matter of

equitable discretion. 402 Specific performance is available where a party lacks an

adequate legal remedy and establishes that (1) a valid contract exists; (2) it is ready,

willing, and able to perform; and (3) the balance of equities tips in its favor.403 The

first element is undisputed; the EPA is a valid and binding contract. I turn to the

remaining elements.

1. Lack of Adequate Remedy at Law

Krafton argues that specific performance is unavailable because Fortis has an

adequate remedy at law.404 To support this premise, it points to pre-litigation

settlement discussions over the earnout dispute, insisting that the Key Employees’

“true object is money.”405 Although Fortis seeks monetary relief for its earnout

401 L-5 Healthcare P’rs, LLC v. Alphatec Hldgs., Inc., 2024 WL 3888696, at *8 (Del. Ch. Aug. 21, 2024) (“But when a party has agreed to a provision like [a] specific performance clause, the party must establish a persuasive and case-specific reason why the clause should not be respected.” (citation omitted)); see Williams Cos. v. Energy Transfer Equity, L.P., 2016 WL 3576682, at *2 (Del. Ch. June 24, 2016) (“Delaware is strongly contractarian, and the presence of a provision in favor of specific performance in case of breach, as the parties contracted for here, must be respected.”), aff’d, 159 A.3d 264 (Del. 2017). 402 Am. Healthcare Admin. Servs., Inc. v. Aizen, 285 A.3d 461, 495 (Del. Ch. 2022). 403 See Osborn, 991 A.2d at 1158. 404 Def.’s Post-trial Br. 58. 405 Id. at 58-59. The record belies Krafton’s characterization of these negotiations. Buyout discussions arose during a period of escalating tension between the parties, which included 80 claims in Phase Two of this case, damages cannot provide Fortis with complete relief

in Phase One.

The Key Employees’ right to operational control over Unknown Worlds was

a crucial, bargained-for protection.406 It guaranteed the Key Employees a long

period of authority over the studio, including its “product roadmap, launch, [and]

planning.”407 Krafton stripped the Key Employees of this control by wrongfully

terminating them, which deprived them of the freedom to guide Unknown Worlds

consistent with their creative vision.408 The loss of such control, including over the

launch of Subnautica 2, constitutes irreparable harm.409

Krafton suspending Unknown Worlds’ access to its Steam publishing console. See supra notes 209-211. The Key Employees were not solely motivated by money; Gill emphasized that a condition of any buyout was ensuring “the team is in good hands.” JX 1190A at 2. Krafton relies on Gill’s “just pay it” statement to Park, but context defeats this reliance. See Gill Tr. 94-96. Krafton also claims the Key Employees rejected an “offer” to extend the earnout. Def.’s Post-trial Br. 28-29. Park merely stated she was “willing to help secure the adjustment” and, when pressed for details, admitted she was “not [t]here to talk about such details.” JX 856 at 6. 406 See Bubb Tr. 873-74 (testifying that because Krafton had an economic incentive to depress revenue by delaying product launches, Section 2.7(f) was the “principal feature” used to protect the sellers by granting them operational control). 407 EPA § 2.7(f). 408 To the extent that this harm was suffered by the Key Employees, rather than to the former stockholders more broadly, I note that the EPA authorizes Fortis as a “Representative” to act as the sellers’—including the Key Employees’— “attorney-in-fact and exclusive agent” “in any and all capacities under [the EPA].” EPA § 11.16(a). 409 Potter v. Cmty. Commc’ns Corp., 2004 WL 550747, at *3 (Del. Ch. Mar. 11, 2004) (finding irreparable injury from the loss of creative control over programming rights). 81 The text of the EPA bolsters this conclusion. The parties agreed that

“irreparable damage, for which monetary relief, even if available, would not be an

adequate remedy, would occur in the event that any provision of [the EPA]” was

breached.410 The Delaware Supreme Court has confirmed that such a provision

should be honored unless a defendant can provide a “persuasive reason” to disregard

it.411 Krafton offered none.

2. Readiness to Perform

Krafton next argues that the Key Employees are not “ready, willing, and able

to perform.”412 The Key Employees maintain they are not only ready but eager to

return to Unknown Worlds. 413 I credit this testimony. The more difficult question is

what roles, if any, they should resume.

By the time they were terminated, the Founders had left the daily rigors of

game development. Cleveland was working no more than four hours per week on

Unknown Worlds tasks, primarily exploring film adaptations. 414 McGuire was

410 EPA § 11.2(a). 411 Martin Marietta Materials, Inc. v. Vulcan Materials Co., 68 A.3d 1208, 1226-27 (Del. 2012). 412 26 Cap. Acq. Corp., 309 A.3d at 464 (“By definition, the remedy of specific performance contemplates that the parties will perform the contract, so the party seeking that remedy must be ready, willing, and able to perform.”); see Def.’s Post-trial Br. 60 (quoting 26 Cap., 309 A.3d at 464). 413 Gill Tr. 119; McGuire Tr. 258-60; Cleveland Tr. 753-54. 414 See supra Section I.K. 82 focused on researching the effect of video games on children with autism. 415 Though

both continued to offer valuable mentoring and high-level direction to the

Subnautica 2 team, they had purposefully stepped back from the studio’s day-to-day

work.

Gill, by contrast, carried the operational weight of Unknown Worlds. As

CEO, he oversaw budgeting, managed personnel, and drove business

development—all while serving as the primary liaison to an increasingly hostile

parent company.416 Krafton’s executives levied no complaints about his dedication

or performance, and internal Krafton communications even explored keeping Gill

while ousting the others.417 He was, by all accounts, a highly effective executive.

Equity favors a tailored solution. The irreparable harm is the Key Employees’

loss of operational control over Unknown Worlds. The EPA requires that only one

Key Employee be employed for that control right to persist. 418 Restoring Gill to his

CEO position accomplishes that goal and vindicates the Key Employees’ bargained-

for rights.

415 See supra Section I.K; see supra note 136. 416 See supra notes 93-96, 137-138. 417 See Park Tr. 487 (describing Gill’s responsibilities as encompassing “planning, HR, like headcounts, financial budgeting, some biz development, partnership management,” and “corporate operations management”); Gill Tr. 54; see also JX 1202 (June 9, 2025 Slack from Yoon to Kim outlining a scenario to “replace the other directors except for Ted”); Yoon Tr. 653-54. 418 EPA § 2.7(f). 83 This measured relief does not require restoring Cleveland and McGuire to the

non-operational roles they held at the time of their terminations.419 The projects they

were pursuing have value, and their historical contributions to the studio are

profound. But compelling their formal return is unnecessary to remedy the

contractual breach or protect Unknown Worlds’ operational independence. Because

Cleveland and McGuire had entrusted that authority to Gill, restoring Gill alone

satisfies Section 2.7(f). Vesting Gill with the CEO’s authority—including the

discretion to retain Cleveland or McGuire as advisors—remedies the breach while

respecting the studio’s operational structure.

3. Balance of the Equities

Having established that Gill stands ready, willing, and able to perform, I must

ensure the balance of the equities favors this result. Krafton argues that specific

performance would be inequitable because the Key Employees purportedly want

nothing to do with Unknown Worlds after the earnout period ends.420 Not so. Gill

forcefully testified that he wants to return to the studio to “finish what [they] started”

and “make a really positive impact” on the team.421

419 They do not wish to return to the roles they held at the time of the acquisition. 420 See Def.’s Post-trial Br. 61-63; see also Def.’s Pre-trial Br. 61-63. 421 Gill Tr. 119-20. 84 Restoring as Unknown Worlds’ CEO Gill will cause tension with the parent

company given the obvious bad blood between the parties. But corporate friction

does not excuse a material breach of contract.422 Nor does it override a bargained-

for specific performance clause. Krafton and Gill are sophisticated commercial

actors. They can—and must—act in good faith to navigate their remaining

contractual relationship.

The harm to Unknown Worlds absent specific performance is even more

palpable. Unknown Worlds is being run by a part-time CEO who manages another

studio and had never played Subnautica before his appointment.423 Key staff

members have quit, and the early access release of Subnautica 2 has been put in

jeopardy.424

On balance, the equities heavily favor restoring Gill to stabilize the studio.

Before Krafton’s intervention, Subnautica 2 was on track for its intended early

access release under Gill’s leadership. Restoring his position and operational control

will allow the studio to launch its highly anticipated game using the community-

driven development model that made it successful.

422 See Bali v. Christiana Care Health Servs., Inc., 1999 WL 413303, at *6 (Del. Ch. June 16, 1999) (observing that although “the relationship between the[] parties is strained,” it was “not so strained as to prevent” an award of specific performance). 423 Papoutsis Dep. 72; JX 945. 424 See Verrette Tr. 670-73; see also Pl.’s Post-trial Opening Br. 33, 56-58. 85 B. The Scope of the Relief

As relief for Krafton’s breaches, Fortis is entitled to specific performance

restoring Gill as CEO of Unknown Worlds. This restoration carries a concomitant

right to operational control under Section 2.7(f) of the EPA. Krafton’s breaches and

this litigation have cut into the period of operational control the Key Employees were

promised. To replace that lost time, Gill’s period of operational control will be

extended by the duration of his ouster.425

Fortis also asks that I restore the Key Employees to their positions on

Unknown Worlds’ Board. On July 1, 2025, Krafton removed the Key Employees as

directors and installed its own designees, who immediately resolved to remove the

Key Employees as officers.426 In Fortis’s view, “to restore the [Key Employees] to

operational control,” I must also “return the [B]oard to its pre-termination

composition.”427 I decline to do so. The Key Employees lack any entitlement to

Board seats, and Krafton—as Unknown Worlds’ sole stockholder—has the right to

elect directors.

Still, the July 1 resolution is problematic insofar as it states that “Subnautica

2 shall not be released for early access absent further review and the affirmative vote

425 See Pl.’s Post-trial Reply Br. 36. 426 See JX 964 at 3-5 (describing Unknown Worlds’ new CEO Steve Papoutsis, and Krafton’s Richard Yoon and Soyoung Han as directors, alongside Park). 427 Pl.’s Post-trial Opening Br. 60-61. 86 of a majority of the Board.”428 This resolution directly contravenes the Key

Employees’ retained authority over “product roadmap” and “launch” granted by the

EPA.429 Because I am restoring Gill’s bargained-for operational control, the July 1

resolution is declared ineffective to the extent it infringes on his contractual rights.430

To ensure this award of specific performance is not illusory, Krafton is enjoined from

using the Unknown Worlds Board, or any other corporate lever, to circumvent

Section 2.7(f) or impede Gill’s decision-making authority over the early access

launch of Subnautica 2. Krafton must also immediately restore to Gill all access

necessary to effectuate that authority, including over the Steam publishing

platform.431

428 JX 964 at 4 (emphasis added). The resolution attempts to justify this restriction by stating that the Board reviewed the game and agreed it “is currently not ready for early access release.” Id. The trial record casts doubt on this finding and suggests it is pretextual. See, e.g., Gill Tr. 107-08 (noting Krafton’s own publishing team in El Segundo supported the release and was “super excited to be working with us on it”); Cleveland Tr. 745 (testifying that the game “looked totally amazing” and was ready). Irrespective of the game’s state of development, the EPA vests the contractual authority to make launch decisions with Gill. 429 EPA § 2.7(f). 430 See Hanby v. Wereschak, 207 A.2d 369, 370 (Del. 1965) (“[T]he Court of Chancery [has] the inherent powers of equity to adapt its relief to the particular rights and liabilities of each party.”); supra infra note 431 (citing case law). Fortis asks that I declare the resolution ultra vires. Pl.’s Post-trial Opening Br. 61 n.7. Although the Board had the authority to adopt the resolution, equity will not permit a parent company to use its subsidiary’s board to evade its own contractual obligations. 431 See Hogg v. Walker, 622 A.2d 648, 654 (Del. 1993) (explaining that the court has “broad latitude to exercise its equitable powers to craft a remedy”); see also Rsrvs. Dev. LLC v. Severn Sav. Bank, FSB, 961 A.2d 521, 525 (Del. 2008) (“The Court of Chancery has broad discretion to fashion equitable relief.”). In granting this relief, I do not intend to deprive 87 The original earnout window—defined in the EPA as the “Testing Period”—

was set to expire on December 31, 2025, subject to Fortis’s unilateral option to

extend it to June 30, 2026.432 Because Krafton’s breach wrongfully deprived the

Key Employees of operational control during this window, Fortis’s request to extend

the earnout period is granted. 433

When fashioning a specific performance remedy, this court has the broad

equitable authority to extend contractual timeframes to ensure the remedy is

complete and the non-breaching party receives the benefit of its bargain.434 To afford

the sellers a genuine opportunity to achieve the earnout under Gill’s restored

leadership, the Testing Period is extended by the duration of Gill’s ouster.435 The

Krafton of its rights as Unknown Worlds’ sole stockholder, provided those rights are not exercised to circumvent Section 2.7(f) or thwart the specific performance ordered in this opinion. 432 EPA § 1.1 (defining “Testing Period”); id. § 2.7(b)(iii) (detailing the extension option). 433 PTO ¶ 122(c). 434 See Bryan v. Moore, 863 A.2d 258, 260-61 (Del. Ch. 2004) (extending a transactional performance deadline to effectuate specific performance); see supra notes 430-431 (citing case law). This equitable power is routinely employed to extend time-bound periods by the exact duration of a breach. See, e.g., Heartland Payment Sys., LLC v. InTEAM Assocs., LLC, 171 A.3d 544, 570-71 (Del. 2017) (affirming the extension of a contractual period by 18 months to account for a breach of the same duration); cf. Arxada Hldgs. NA Inc. v. Harvey, 2026 WL 220511, at *32-33 (Del. Ch. Jan. 28, 2026) (“A court can extend a restrictive covenant to replace the period during which a party was in breach.”). 435 See EPA § 1.1 (defining “Maximum One-Year Revenue” and “Relevant Period”). The EPA calculates the earnout based on the four consecutive calendar quarters with the highest revenue during the Testing Period. By ousting Gill for over eight months, Krafton deprived the sellers of the pre-release runway to launch the game and capture four consecutive quarters of post-release revenue before the contractual window closed. This equitable extension ensures that the specific performance remedy is not illusory. See Tri State Mall 88 base December 31, 2025 earnout deadline is therefore extended by 258 days, equal

to the period between Gill’s termination and this opinion, which establishes a new

base deadline of September 15, 2026.436 Furthermore, Fortis retains its contractual

right under Section 2.7(b)(iii) of the EPA to unilaterally extend the Testing Period

by an additional six months (to March 15, 2027) upon written notice to Krafton.437

Even with this equitable extension of the Testing Period, the litigation is not

over. The remaining open questions include whether Krafton breached its promise

not to “take any actions [with] the primary business purpose of . . . depriv[ing]” the

Assocs. v. A.A.R. Realty Corp., 298 A.2d 368, 371-72 (Del. Ch. 1972) (“[T]he Court in decreeing specific performance will adjust the equities of the parties in such a manner as to put them as nearly as possible in the same position as if the contract had been performed [a]ccording to its terms.”); Fortis Advisors LLC v. Johnson & Johnson, 2024 WL 4048060, at *50 (Del. Ch. Sept. 4, 2024) (explaining, in the context of an earnout case, that “[o]nce liability [for a breach] is established, ‘this court has broad discretion to tailor a remedy to suit the situation as it exists’” (quoting Gilliland v. Motorola, Inc., 873 A.2d 305, 312 (Del. Ch. 2005))), aff’d in part, rev’d in part on other grounds, —A.3d—, 2026 WL 89452 (Del. Jan. 12, 2026). 436 The duration of this equitable extension is calculated by measuring the period from the date of Gill’s wrongful termination on July 1, 2025, to the date of this opinion restoring his operational control on March 16, 2026. This period spans exactly 258 days. Adding 258 days to the base Testing Period deadline of December 31, 2025 yields an equitably extended base deadline of September 15, 2026. 437 EPA § 2.7(b)(iii). Fortis has the “sole discretion” to extend the Testing Period to June 30, 2026 (or, as equitably extended here, March 15, 2027) “by delivering written notice to [Krafton] within 10 Business Days following the Initial Revenue Determination Date.” Id. Because Krafton breached the EPA, the normal timeline for calculating the initial revenue and hitting that “Determination Date” has been frustrated. Because the base Testing Period has been equitably extended, the corresponding Initial Revenue Determination Date and the window for Fortis to deliver its written notice are equitably extended in tandem. Should Fortis give such written notice, the Testing Period will be extended through March 15, 2027. 89 sellers of the earnout,438 and whether Fortis is entitled to money damages for earnout

revenues permanently lost due to Krafton’s breaches and litigation delays. I will

resolve them in Phase Two.

IV. CONCLUSION

For the reasons explained above, judgment is entered in favor of Fortis on its

Phase One claims. Krafton breached the EPA by terminating the Key Employees

without valid Cause and by improperly seizing operational control of Unknown

Worlds.

To remedy these breaches, Fortis is entitled to specific performance. Edward

Gill is hereby reinstated as CEO of Unknown Worlds, and his period of operational

control under Section 2.7(f) of the EPA will be extended by the time that elapsed

between his wrongful termination and his restoration. The July 1, 2025 Board

resolution is declared ineffective to the extent it infringes on Gill’s operational

control right. Krafton is enjoined from circumventing Section 2.7(f) or impeding

Gill’s authority over the early access launch of Subnautica 2 and must immediately

restore his access to the Steam platform. Finally, the base earnout Testing Period is

equitably extended by 258 days to September 15, 2026, and Fortis retains its

contractual right to further extend the Testing Period to March 15, 2027.

438 Id. § 2.7(e). 90 Within three business days, the parties are directed to confer and submit a

proposed form of partial judgment implementing this decision. In addition to the

matters remaining for Phase Two, the court will retain jurisdiction to enforce the

specific performance order.