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Tom: The term of this agreement is for the duration of the three games covered by it (17.1). Activision retained the right to cancel for convenience with specific additional payments and credits depending on the stage of game development at the time that right is executed (17.2). Activision’s total exposure for a termination for convenience of any single Game is the completed milestone payments and a possible $500,000.00 cancellation fee if the game is finished and in playable form when cancelled (17.3).
Any Material Breach not cured within 30 days is the basis for termination “for cause” by the non breaching party (17.4). Oddly enough, if Spark terminates for a material breach by Activision, the payments to Spark are payments for the delivered and approved milestones and a pro rata payment for the then partially completed milestone but no $500,000 extra payment similar to what is included with the “termination for convenience” provision above for a playable product. If the Game is in the distribution pipeline being sold, then Spark also receives royalties.
But, if the payments are made, Spark must continue to support the Game (17.5). If terminated by Activision for a material breach by Spark, the advances already paid are non-refundable, provided that Spark complies with the following section (17.6) Spark is required to deliver all work in progress, including all source code in order to receive the payments under the prior section.
This provision even requires Spark to allow someone from Activision to come onsite to supervise the transfer of all assets (17.7). For some unknown reason the survivability of certain provisions, including portions of this section is included here, instead of in the General Provisions later in the contract and it is numbered wrong too (another 17.7). Looks like even the heavy weight lawyers at Activision screw up some times.
Chris & Dave: Not surprisingly, the termination clauses allow Activision to terminate the agreement for any reason or for no reason (“for convenience”). If Activision terminates for convenience, Activision must pay a cancellation fee, but gets to keep the IP. This is typical in game development agreements, although some developers are able to negotiate the right to complete the game with a new publisher after termination for convenience, provided that the developer reimburses the first publisher over a period of time for the amounts the developer received from the first publisher.
Also not surprisingly, the termination for cause provisions don’t entitle Spark to a cancellation fee. That’s why developers usually want a clause in the agreement to say that their late delivery is not a material breach of the contract if the lateness was caused by the publisher (see our comments on section 6). Typical delays are late feedback on milestones, requiring additional work that’s outside the scope of the design documents, failing to provide assets and licenses required to develop the game, and failing to pay advances on time.
Tom: Confidentiality. The parties agree to keep all confidential information of the other party secret, except that Activision had the right to share the Game Design Document with third parties, which one would assume meant for marketing and distribution purposes, though it does not limit its distribution. As usual, the terms of the agreement itself are included as being confidential (18.1). The details of keeping the proprietary information secret is set out in detail (18.2). And the usual statutory exceptions to the release of information that has become public, previously released by either party, does no include proprietary information or was independently developed prior to the agreement is set out (18.3). Within three days after the termination of the Agreement each party was required to return all confidential materials and all copies of it (18.4). Of course, Spark was required to have all of its employees sign a confidentiality agreement consistent with this section (18.5).