Hank finds Clarence in the castle. Clarence says that Sir Launcelot scored a huge coup on Hank's stock-board—which all the knights participate in—and took a great deal of money from the king's nephews, Mordred and Agravaine.
The two boys got cranky—taking someone's money will do that to them—and in retaliation, told Arthur that Launcelot was, um, having sleepovers with Guenever. War quickly ensues.
A great battle took place at Launcelot's castle and many knights were killed. Launcelot then sailed to France and Arthur chased after him.
While he was gone, Mordred served as king… and decided he liked it too much to give up.
Arthur returned to reclaim his lands, and lost his army in pitched battle; he and Mordred then killed each other on the field.
The Church, waiting to strike, labeled Hank a traitor in a published Interdict, so he is now a wanted man, and all of his inventions and advancements are being destroyed.
Clarence says that he and fifty loyal men have made preparations for a siege in Merlin's cave, which holds a large electrical plant.
Hank issues a proclamation, claiming authority over the kingdom in the wake of Arthur's death. He lists Merlin's cave as his address, and he and Clarence head there.