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Eastside Games Group Lawsuit by Truly Social Games

East Side Games Group Lawsuit, East side Game Group Jason Bailey Lawsuit, Jason Bailey East Side Games Lawsuit

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Eastside Games Group Lawsuit by Truly Social Games

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  1. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 1 of 16 1 CORR CRONIN LLP Blake Marks-Dias, OSB # 30327 Steven W. Fogg, (pro hac vice application forthcoming) Todd T. Williams, (pro hac vice application forthcoming) 1015 Second Avenue, Floor 10 Seattle, WA 98154 Telephone: (206) 625-8600 Fax: (206) 625-0900 bmarksdias@corrcronin.com sfogg@corrcronin.com twilliams@corrcronin.com Attorneys for Plaintiff 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 11 FOR THE DISTRICT OF OREGON 12 TRULY SOCIAL GAMES, LLC, an Oregon limited liability company No. 3:22-cv-01663-AR FIRST AMENDED COMPLAINT DEMAND FOR JURY TRIAL 13 14 Plaintiff, 15 v. LEAF MOBILE, INC., a British Columbia corporation, now doing business as EAST SIDE GAMES GROUP, INC., 16 17 18 Defendants. 19 20 I.PRELIMINARY STATEMENT 21 Defendant Leaf Mobile, Inc. (“Leaf”)1 promised to fund and provide support for 1. 22 the development and marketing of four online games by developer Truly Social Games, LLC 23 1 Defendant Leaf is now doing business as East Side Games (“ESG”) following acquisition of ESG in 2021. 24 25 FIRST AMENDED COMPLAINT– 1 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  2. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 2 of 16 1 (“TSG”). Leaf also promised a series of lucrative payments to TSG based on various earnings 2 targets that should have been easily achievable according to projections generated by Leaf. In 3 exchange, TSG offered Leaf the opportunity to acquire TSG as a subsidiary. TSG also 4 committed to develop the coding and artwork for the four online games that Leaf was to fund. 5 2. Instead of supporting the development pursuant to the terms of the parties’ 6 agreement, Leaf refused to provide the necessary financial, marketing, management, and 7 analytical backing for the online games, leaving the games developed by TSG in a state of 8 disrepair and neglect, and in the process causing financial damage to TSG in the form of lost 9 royalties and payments that were tied to the games’ performance. After failing to uphold its end 10 of the bargain and intentionally harming the financial performance of the four games developed 11 by TSG, Leaf now seeks to improperly terminate the contract with TSG, steal for itself the code 12 base and artwork created by TSG, and excuse itself from any further obligations. On 13 information and belief, Leaf’s actions are part of a concerted and deliberate business strategy 14 that Leaf has executed multiple times in an effort to take advantage of the skills and expertise of 15 online game developers for Leaf’s benefit while at the same time refusing to pay developers 16 what they are owed and cutting the developers out of future earnings related to the games. 17 3. TSG files this lawsuit to protect its rights under the parties’ agreement and to 18 secure compensation for the damage that Leaf has done. 19 II.PARTIES 20 4. Plaintiff Truly Social Games, LLC (“TSG”) is an Oregon limited liability 21 company with its principal place of business in Portland, Oregon. 22 5. Defendant Leaf Mobile, Inc. (“Leaf”) is a British Columbia corporation with its 23 principal place of business in Vancouver, British Columbia. 24 6. Defendant East Side Games Group, Inc. is the successor in interest to Leaf. 25 FIRST AMENDED COMPLAINT– 2 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  3. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 3 of 16 1 III.JURISDICTION AND VENUE 2 7. The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(a)(2) 3 because the amount in controversy, exclusive of interest and costs, exceeds $75,000. For 4 diversity purposes, TSG is a citizen of the State of Oregon and Leaf is a foreign citizen of 5 Canada. 6 8. The Court has personal jurisdiction over Leaf under the United States 7 Constitution because it has had and continues to have sufficient contacts with the forum state. 8 This includes, for example, entering into a contract for purchase of membership interest in TSG, 9 which is based in Oregon; by regularly communicating with TSG’s founders, senior executives, 10 and employees who reside in the forum state regarding the subject of the contract and the issues 11 in dispute in this lawsuit; by appointing a Leaf representative to the TSG board of directors, and 12 by regularly submitting payments to TSG in Oregon. Accordingly, this Court’s exercise of 13 personal jurisdiction over Leaf does not offend traditional notions of fair play and substantial 14 justice. 15 9. The Court may also exercise personal jurisdiction over Leaf pursuant to Oregon’s 16 Long-Arm Statute, Or. R. Civ. P. 4, which confers jurisdiction “to the extent permitted by due 17 process.” Gray & Co. v. Firstenberg Mach. Co., Inc., 913 F.2d 758, 760 (9th Cir. 1990). As 18 discussed above, this Court has personal jurisdiction over Leaf under the United States 19 Constitution, and as such, also has personal jurisdiction under Oregon’s Long-Arm Statute. 20 10. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b)(1), 21 because Leaf is not resident in the United States, and therefore pursuant to 28 U.S.C. § 22 1391(c)(3), Leaf “may be sued in any judicial district[.]” TSG’s headquarters and operations are 23 based in this judicial district, and much of the relevant witnesses and information are also 24 located here. 25 FIRST AMENDED COMPLAINT– 3 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  4. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 4 of 16 1 IV.FACTUAL ALLEGATIONS A. 2 TSG Develops World Class Online Games 3 11. TSG is a private company headquartered in Portland, Oregon. TSG designs and 4 develops engaging mobile games. TSG’s founders and executives work out of TSG’s offices in 5 Portland. TSG developers have created numerous successful online games since TSG’s 6 inception in 2015, including games such as Planet Gold Rush, Bomb Brawl, Idle Surfing, 7 Invincible Hero, Archer: Danger Phone as well as announced titles such as Budfarm: Bud 8 Master and Trailer Park Boys: Get Merged. 9 12. TSG specializes in the ability to develop online games that have a loyal and 10 persistent player following. The games developed by TSG have a particular ability to generate 11 substantial income from players based on design elements that encourage players to make in- 12 game purchases. 13 13. Leaf is a publicly traded mobile game platform and publishing company based in 14 Vancouver, British Columbia. Leaf, now known as East Side Games Group Inc., licenses and 15 publishes online games. In 2021 Leaf did not have the internal capabilities to develop and 16 design the volume of games that it sought to publish. Accordingly, Leaf sought to partner with 17 developers to generate the games that it sought to publish and monetize. B. Leaf Contracts with TSG to Acquire Ownership in TSG and for TSG to Develop Lucrative Games 18 19 14. In 2021, TSG, through its representatives based in Oregon, began discussions 20 with Leaf to develop multiple online games for brands that Leaf had licensed. Leaf did not have 21 the expertise or experience to successfully develop the games and was looking to TSG to 22 develop and help tune the games, once published, for maximum profitability. TSG was willing 23 to participate in the development of the games as long as Leaf, a publicly traded and well 24 financed company, funded the development costs and agreed to share in the royalties of the 25 FIRST AMENDED COMPLAINT– 4 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  5. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 5 of 16 1 games once released. TSG made clear to Leaf that Leaf would be required to provide analytical 2 and collaborative support to maximize the profitability of the games. TSG was also willing to 3 offer Leaf ownership in TSG in the hopes of solidifying future partnerships. 4 15. On June 16, 2021, TSG and Leaf entered into a Membership Interest Purchase 5 Agreement (“Agreement”). A copy of the Agreement is attached here as Exhibit A. The 6 Agreement provided that TSG would issue to Leaf shares equivalent to a 20% ownership in 7 TSG in exchange for Leaf’s contribution of sufficient funds to develop four separate games 8 based on an agreed budget and up to a maximum amount of $3,000,000: 9 In consideration of the Initial Interest, LEAF shall subscribe for and contribute to TSG LLC an amount (the “Initial Interest Consideration”) equal to the aggregate amounts needed by the TSG Group to develop the Subject Titles only, and in accordance with a development budget to be mutually agreed upon by LEAF and TSG LLC, acting reasonably, to a maximum capital contribution of $3,000,000 in the aggregate, to be advanced quarterly in the amounts described in aforementioned development budget. 10 11 12 13 14 16. The four games to be developed by TSG and published and marketed by Leaf 15 were identified in the Agreement as Archer: Danger Phone, Roll for Adventure: Idle RPG, Bud 16 Master and a fourth title, to be determined (“Subject Titles”). 17 17. The Agreement also provided that concurrent with the issuance of shares, Leaf 18 would be granted a seat on the TSG board of directors: 19 Concurrent with the contribution by Leaf and the issuance to Leaf of the Initial Interest, the Vendors and the manager of TSG, LLC, as applicable, shall adopt and approve the Third Amended and Restated Operating Agreement of TSG LLC to more particularly provide for their respective rights, powers, duties and obligations as members, and the management, operations and activities of the TSG LLC and each Vender and Leaf shall enter into and be bound by the terms and conditions of such Third Amended and Restated Operating Agreement of TSG LLC; and each TSG Entity, Vendors, members, managers, as applicable, (each an “Approving Party”and together “Approving Parties”) shall cause a nominee of LEAF to be appointed to its respective board of directors or board of managers, as applicable, and each Approving Party, as applicable, shall continue 20 21 22 23 24 25 FIRST AMENDED COMPLAINT– 5 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  6. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 6 of 16 1 to cause a nominee of LEAF to be appointed to its respective board of directors or board of managers, as applicable so long as LEAF holds 20% or more of the issued and outstanding voting securities of TSG LLC, calculated on a fully- diluted basis. For greater clarity, in the event that this Agreement should conflict with the Third Amended and Restated Operating Agreement, the terms of this Agreement shall prevail. 2 3 4 18. 5 Because the parties recognized that the games to be developed under the 6 Agreement had the potential to be very lucrative once published, the parties agreed that Leaf 7 could (and in certain cases was required to) purchase additional shares in TSG at certain revenue 8 milestones and the parties agreed that when certain other revenue milestones were reached, the 9 purchase price would be adjusted upward, effectively rewarding TSG for the performance of the 10 games it had developed. 19. 11 Specifically, Section 2.2 of the Agreement provided Leaf the option to purchase 12 an additional 20% ownership in TSG. Section 2.2 also stated that Leaf was “required” to 13 purchase additional shares in TSG for $4,000,000 if the gross revenue with respect to the 14 Subject Titles was “at least $3,000,000…for a period of two (2) consecutive calendar months” 15 or if Leaf was required to pay TSG “at least $500,000 in aggregate net royalty payments with 16 respect to the Subject Titles per month, for a period of two (2) consecutive calendar months.” 20. 17 Section 2.3 of the Agreement provided Leaf the option to purchase the remainder 18 of the outstanding shares in TSG. Section 2.3 also stated that Leaf was “required” to purchase 19 the remaining shares in TSG for $15,000,000 if the gross revenue with respect to the Subject 20 Titles was “at least $5,000,000…for a period of three (3) consecutive calendar months” or if 21 Leaf was required to pay TSG “at least $1,000,000 in aggregate net royalty payments with 22 respect to the Subject Titles per month, for a period of three (3) consecutive calendar months.” 21. 23 In sum, the Agreement contemplated the eventual merger of TSG as a subsidiary 24 under the umbrella of Leaf. The Agreement also contemplated a partnership between Leaf and 25 FIRST AMENDED COMPLAINT– 6 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  7. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 7 of 16 1 TSG wherein TSG stood to share in the benefits of the partnership through additional share 2 purchases and shared royalty payments on the Subject Titles. 3 22. In entering the Agreement, TSG’s leadership in Oregon relied on promises made 4 by Leaf executives, including Jason Bailey, Josh Nilson, and Derek Lew that Leaf would fund 5 the initial development of the Subject Titles for up to $3,000,000 and that Leaf would support 6 the development of its games with analytics and reasonable collaborative support so that the two 7 parties could maximize the profitability of the Subject Titles. TSG also relied on statements by 8 Jason Bailey, Josh Nilson, and Derek Lew made to TSG’s leadership in Oregon that Leaf 9 intended to pursue in good faith the acquisition of TSG and partnership with TSG contemplated 10 by the Agreement. 11 23. In entering the Agreement, TSG also relied on historical metrics for various 12 online games published by Leaf and projections provided by Leaf to TSG’s representatives in 13 Oregon that detailed the estimated revenue share for Archer: Danger Phone. These projections, 14 which were provided by Leaf in an attempt to induce TSG to enter the Agreement, demonstrated 15 that achieving the revenue milestones in Sections 2.2 and 2.3 of the Agreement (and thereby 16 receiving additional payments from Leaf) was a virtual certainty. For example, these 17 projections, provided by Jason Bailey, identified that Archer: Danger Phone was likely to 18 achieve, by itself, at least $2,000,000 in gross revenue per month. 19 24. In entering the Agreement, TSG also relied on representations made by Leaf to 20 TSG’s representatives in Oregon that the contents of a software development starter package, 21 termed an “IdleKit” by Leaf, would purportedly allow the development of at least one of the 22 Subject Titles to be expedited. 23 25. The Agreement permitted termination upon written notice by Leaf only if Leaf 24 “is not then in material breach of any provision” of the Agreement and TSG failed to perform 25 under the Agreement. See Agreement Section 8.1. FIRST AMENDED COMPLAINT– 7 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  8. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 8 of 16 1 26. Following execution of the Agreement, TSG issued to Leaf shares equivalent to a 2 20-percent ownership in TSG and the TSG operating agreement was amended to grant Leaf a 3 seat on the TSG board of directors. Pursuant to the TSG operating agreement, Leaf had the sole 4 authority to select and appoint the individual it wanted to serve as its Manager on the board of 5 directors. Leaf also had the sole authority to “remove[] or replace[]” its appointed manager “at 6 any time, with or without cause.” Leaf appointed Jim MacCallum to serve as Leaf’s 7 representative on the board of directors. Through MacCallum, Leaf exercised its fiduciary 8 obligations as a member of the TSG board of directors. C. Leaf Fails to Fund Development of the Games, Fails to Support the Games’ Development, and Causes Damage to TSG 9 10 27. Beginning not long after the execution of the Agreement, it became clear that 11 Leaf did not intend to live up to its end of the bargain. Despite multiple efforts to reach 12 agreement on a budget necessary for the development of the identified games, Leaf refused to 13 agree on the necessary funding required to support the development of the games. 14 28. Instead, Leaf demanded, contrary to the Agreement, that TSG generate an invoice 15 every month outlining TSG expenditures and development costs for each project. These 16 invoices were then reviewed by Leaf and subject to multiple requests for justification until 17 partial payment was authorized. This process would often delay payments beyond the quarterly 18 payments contemplated by the Agreement and resulted in inadequate funds to accomplish the 19 development of the games contemplated by the Agreement. On multiple occasions, TSG had 20 challenges meeting payroll costs as a result of Leaf’s refusal to honor the Agreement. Often, the 21 payments requested by TSG under the Agreement were unreasonably rejected by Leaf 22 altogether, leaving TSG to cover development expenses on its own. Leaf also repeatedly 23 directed TSG to reduce the costs and resources that TSG was devoting to developing and 24 maintaining the Subject Titles as financially successful games. At the time Leaf purported to 25 FIRST AMENDED COMPLAINT– 8 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  9. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 9 of 16 1 terminate the contract with TSG, Leaf had paid only approximately $2,100,000 of the 2 $3,000,000 that Leaf promised to pay to fund development of the Subject Titles. 3 29. In addition to refusing to fund the reasonable development of the Subject Titles, 4 TSG also discovered that the “IdleKit” which Leaf promoted as a way to efficiently build at 5 least one of the online games, was nothing more than a few spreadsheets that provided little to 6 no assistance in the necessary development steps. As a result, TSG was forced to spend 7 additional time and resources to build the software necessary to support the Subject Titles. 8 30. On October 12, 2022 Leaf demanded, without justification, that TSG use the 9 proceeds from a tax refund received from the Canadian Revenue Agency to fund its operations, 10 instead of relying on payment from Leaf. Leaf withheld payment from TSG under the 11 Agreement on account of this refund, effectively starving TSG of needed and promised 12 payments under the Agreement. 13 31. Further, Leaf failed to provide the requisite analytical support contemplated by 14 the parties to enable the games to succeed in the marketplace. As only one example, Leaf has 15 failed to provide statistics and metrics to TSG regarding all of the Subject Titles to allow TSG to 16 optimize the games in the marketplace and increase profitability. Additionally, Leaf has 17 repeatedly issued contradictory direction and changing specifications on game development, 18 leaving TSG guessing and without guidance on the ultimate deliverables sought by Leaf. 19 32. Contrary to Leaf’s obligations and commitments consistent with the Agreement, 20 Leaf has also failed to devote the necessary marketing resources to the Subject Titles. The 21 success of an online game in the marketplace is directly tied to the amount of marketing 22 resources devoted to promoting that game. After TSG completed development of the Subject 23 Titles, Leaf diverted marketing resources that were earmarked for the Subject Titles to other 24 projects that Leaf had underway. Leaf’s diversion of marketing resources away from the 25 Subject Titles has directly and negatively impacted the success of the Subject Titles. FIRST AMENDED COMPLAINT– 9 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  10. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 10 of 16 1 33. TSG has performed under the Agreement in the development of the contemplated 2 games. In fact, Leaf CEO Jason Bailey told TSG that TSG’s development of Bud Master was 3 one of the best developed games that he had seen. Notwithstanding TSG’s outstanding 4 performance, the games developed by TSG have failed to attract the users and revenue projected 5 by Leaf due to Leaf’s failure and refusal to provide reasonable funding under the Agreement for 6 the development of the games and analytical and marketing support essential to the success of 7 the Subject Titles. 8 34. As a result of Leaf’s failure to reasonably fund and support the development of 9 the games, the games have failed to attract and retain anticipated users in the marketplace and 10 TSG has been denied the benefits of further investment, royalties, and revenue sharing from the 11 games. Executing a Planned Business Strategy, Leaf Attempts to Take Exclusive Control of TSG’s Games After Purporting to Terminate TSG 12 D. 13 35. In the months leading up to October 2022, Leaf, though its representatives, had 14 directed TSG not to perform any further work on Archer: Danger Phone projects that would 15 lead to increased traffic and revenue. On August 19, 2022, Leaf’s representative for Archer 16 development instructed TSG “not [to] move forward with any new approvals or asks” related to 17 driving users to the game. On October 12, 2022, Leaf directed TSG to shift the game Archer: 18 Danger Phone into “auto pilot” mode and to effectively cease support and user acquisition for 19 the game. Archer: Danger Phone was one of the more profitable games developed by TSG, 20 bringing in over $1M in revenue over a 40 day period. By directing TSG to cease support for 21 Archer: Danger Phone, Leaf caused revenue for Archer: Danger Phone to plummet, instead of 22 continuing to increase. On information and belief, Leaf took this step, without consultation with 23 TSG and in contravention of the parties’ expectations under the Agreement, in bad faith and in 24 25 FIRST AMENDED COMPLAINT– 10 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  11. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 11 of 16 1 an effort to prevent TSG from accruing the benefits of the expected royalties and additional 2 payments from Leaf under the parties’ Agreement. 3 36. On October 13, 2022, Leaf transmitted a letter to TSG purporting to terminate the 4 Agreement and the parties’ relationship thereunder. Leaf failed to cite any reason for 5 terminating the Agreement. 6 37. The day after sending the letter to TSG purporting to terminate the parties’ 7 Agreement and shutting down Archer: Danger Phone, Leaf again enabled access to the Archer: 8 Danger Phone game, effectively re-starting revenues for a game that Leaf now purported to 9 claim for its own. Leaf has done the same thing with Bud Master. 10 38. Leaf has also attempted to surreptitiously acquire full control of the codebase for 11 the Subject Titles without TSG’s consent. Leaf, through its agents, has repeatedly requested that 12 TSG employees provide access to the codebase for the Subject Titles developed by TSG and 13 which allow further development of the games. Leaf’s actions in attempting to misappropriate 14 the codebase for the Subject Titles and cutting TSG out of any future revenue are contrary to the 15 Agreement and are done by Leaf in bad faith to frustrate the purpose of the Agreement and to 16 prevent TSG from achieving the benefit of the bargain under the Agreement. 17 39. On information and belief, Leaf’s attempt to appropriate the game that TSG 18 developed and cut TSG out of any further revenue sharing arrangement is a calculated business 19 strategy by Leaf designed to exploit developers for Leaf’s benefit. Investigation by TSG has 20 revealed multiple instances where Leaf has employed similar tactics to appropriate development 21 work performed by others and cut developers out of the promised revenue share for online 22 games. As only one example, Leaf employed a similar strategy with the original developer for 23 the game “Archer: Danger Phone”. After completing most of the development, Leaf terminated 24 its relationship with the previous developer and hired TSG. Leaf accomplished the 25 appropriation of the prior developer’s work by falsely promising the prior developer that Leaf FIRST AMENDED COMPLAINT– 11 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  12. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 12 of 16 1 would establish a remote U.S.-based studio for the prior developer’s employees in the Boston 2 area. After a few months, when Leaf had accumulated all of the necessary code and artwork 3 from the prior developer, Leaf closed its Boston studio and terminated its relationship with the 4 prior developers. 5 40. This calculated strategy of misrepresenting Leaf’s intentions in order to steal 6 games developed by others is consistent with statements made by Leaf’s CEO. Leaf CEO Jason 7 Bailey has made statements admitting that he intends to “rip off [] games” from others, that he 8 tries to “get [his] employees to stand up and give [him] their great ideas so that [he] can steal 9 them and own them and then they’ll be mine and make lots of money from [the games] and pay 10 them nothing because I am evil.” It is also consistent with statements from Jason Bailey that he 11 intends to “ruin” TSG. 12 41. On information and belief, Leaf intentionally misled TSG into believing that Leaf 13 intended to abide by the Agreement when its real intention was to use TSG to develop games, 14 refuse to pay TSG the amounts owing under the Agreement, and then steal the games that TSG 15 developed for Leaf’s own benefit. Leaf has taken additional steps in furtherance of this 16 unlawful strategy by continually attempting to get third parties under Leaf’s control to 17 appropriate the code base and artwork from TSG and by threatening to poach from TSG all of 18 its software developers. 19 V.CAUSES OF ACTION 20 COUNT 1 21 BREACH OF CONTRACT 22 42. TSG incorporates by reference the allegations in the preceding paragraph as if set 23 forth fully herein. 24 25 FIRST AMENDED COMPLAINT– 12 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  13. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 13 of 16 1 43. At all times relevant to the allegations in this action, the Agreement was a valid, 2 binding, and enforceable written agreement between TSG and Leaf that was made for valid 3 consideration, intended to facilitate a mutually beneficial collaboration. 4 44. TSG fully performed its contractual duties under the Agreement or was otherwise 5 excused from performance. 6 45. By failing to reasonably fund and support the development of the Subject Titles 7 as contemplated by the Agreement, Leaf has breached, and continues to breach the Agreement. 8 46. By attempting to terminate the Agreement while Leaf was in breach of the 9 Agreement and while TSG was in full performance under the Agreement Leaf has breached, and 10 continues to breach the Agreement. 11 47. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be 12 proven at trial. COUNT 2 13 BREACH OF DUTY OF GOOD FAITH AND FAIR DEALING 14 48. TSG incorporates by reference the allegations in the preceding paragraph as if set 15 forth fully herein. 16 49. At all times relevant to the allegations in this action, the Agreement was a valid, 17 binding, and enforceable written agreement between TSG and Leaf that was made for valid 18 consideration, intended to facilitate a mutually beneficial collaboration. 19 50. Leaf has and had a duty to perform its obligations under the contract in good faith 20 and so as not to deprive TSG of the benefits of the parties’ Agreement. 21 51. TSG fully performed its contractual duties under the Agreement or was otherwise 22 excused from performance. 23 52. By failing to reasonably fund and support the development of the Subject Titles 24 as contemplated by the Agreement, and by taking steps designed to harm the profitability of the 25 FIRST AMENDED COMPLAINT– 13 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  14. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 14 of 16 1 Subject Titles, Leaf has breached, and continues to breach its duty of good faith and fair dealing 2 under the Agreement. 3 53. By attempting to terminate the Agreement while Leaf was in breach of the 4 Agreement and while TSG was in full performance under the Agreement Leaf has breached, and 5 continues to breach its duty of good faith and fair dealing under the Agreement. 6 54. As a result of Leaf’s breaches, TSG has suffered damages in an amount to be 7 proven at trial. COUNT 3 8 UNJUST ENRICHMENT 9 55. TSG incorporates by reference the allegations in the preceding paragraph as if set 10 forth fully herein. 11 56. TSG conferred a substantial benefit upon Leaf, who has accepted, retained, and 12 enjoyed the benefits of the game development services it received from TSG. 13 57. The retention by Leaf of the benefits conferred on it by TSG would be unjust and 14 inequitable because such retention is based on Leaf’s unlawful performance under the 15 Agreement, including without limitation leaf’s failure to reasonably fund and support the 16 development of the subject online games. 17 58. Leaf has been unjustly enriched to the detriment and impoverishment of TSG, not 18 least by accumulating revenues and subscription fees that would have otherwise accrued to TSG 19 and TSG’s impoverishment is a direct result of Leaf’s unjust enrichment. 20 59. Leaf, in equity and good conscience, lacks any justification in retaining the 21 benefits conferred on it by TSG. COUNT 4 22 BREACH OF FIDUCIARY DUTY 23 60. TSG incorporates by reference the allegations in the preceding paragraph as if set 24 forth fully herein. 25 FIRST AMENDED COMPLAINT– 14 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  15. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 15 of 16 1 61. Leaf, as an owner of 20 percent of the shares of TSG and as a board member of 2 TSG, owes fiduciary duties of care, loyalty, and candor to TSG and its shareholders. 3 62. Leaf, in its failure and refusal to reasonably fund and support the development of 4 the online games, and in taking steps designed to harm the profitability of the Subject Titles, has 5 breached its duties of care, loyalty, and candor to TSG. 6 63. As a proximate result of Leaf’s breaches, TSG has suffered damages in an 7 amount to be proven at trial. COUNT 5 8 FRAUDULENT INDUCEMENT 9 64. TSG incorporates by reference the allegations in the preceding paragraph as if set 10 forth fully herein. 11 65. Leaf, through its representatives, knowingly and intentionally misrepresented to 12 TSG that Leaf intended in good faith to pursue the acquisition of and partnership with TSG 13 contemplated by the Agreement, that development of the Subject Titles would generate revenues 14 commensurate with the targets in the Agreement, that Leaf would support the development of its 15 games with analytics and reasonable collaborative support so that the two parties could 16 maximize the profitability of the Subject Titles, and that the contents of a software development 17 starter package, termed an “IdleKit” by Leaf, would purportedly allow the development of at 18 least one of the Subject Titles to be expedited. 19 66. TSG justifiably relied on these representations in entering into the Agreement 20 with Leaf. 21 67. As a proximate result of Leaf’s fraudulent misrepresentations, TSG has suffered 22 damages in an amount to be proven at trial. 23 VI.JURY DEMAND 24 68. TSG demands a trial by jury as to all claims and issues that may be tried to a jury. 25 FIRST AMENDED COMPLAINT– 15 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

  16. Case 3:22-cv-01663-AR Document 6 Filed 11/29/22 Page 16 of 16 1 VII.PRAYER FOR RELIEF 2 69. WHEREFORE, TSG respectfully requests that this Court: 3 1. Enter judgment in TSG’s favor on each Count set forth in this Complaint; 4 2. Award TSG damages in an amount to be proven at trial, caused by Leaf’s 5 unlawful conduct, or, in the alternative, restitution for unjust enrichment; 6 3. Award attorneys’ fees and costs, as permitted by applicable law; 7 4. Award any other relief, legal or equitable, this Court deems appropriate. 8 9 DATED this 29th day of November, 2022. 10 CORR CRONIN LLP s/ Blake Marks-Dias Blake Marks-Dias, OSB # 30327 Steven W. Fogg, (pro hac vice application forthcoming) Todd T. Williams, (pro hac vice application forthcoming) 1015 Second Avenue, 10th Floor Seattle, WA 98104-1001 Telephone: (206) 625-8600 Fax: (206) 625-0900 bmarksdias@corrcronin.com sfogg@corrcronin.com twilliams@corrcronin.com Attorneys for Plaintiff 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FIRST AMENDED COMPLAINT– 16 CORR CRONIN LLP 1015 Second Ave, 10th Floor Seattle, Washington 98154 Tel (206) 625-8600 Fax (206) 625-0900

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