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They walked away from the acquisition deal, but this:

> the same game Star Theory had been developing

certainly means they had an earlier contract.

They had a previous contract for the work up to that point.

No, they walked away from a buyout deal, they had a contract with take two to develop KSP2.

From the article, it seems like the contract was ending, and there were talks of a 6mo extension when everything came apart.

Non-solicit agreements often extend well beyond the terms of work, a year or two seem to be common.