I disagree about it being a breach of fiduciary duty. The company can’t move forward with this carbuncle, and the CTO still gets their equity respected in the form of the licensing deal. A suicide pact would be an inferior execution of fiduciary duty.

Fresh start is likely not an option. You forget about the IP and assets of the company. Can’t take those with you in a fresh start and OP and his investor has a lot of sunk cost here.