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).