Agreement means contract and/or an addendum to an existing contract/agreement. This is how vendors do business with each other. They put out RFPs (request for proposals). Vendors respond with what they can provide and how much it will cost...etc. In this case NP is the vendor to ED/DCS for the headtracking piece of the game. In that agreement it is likely a "covenant not to compete" type clause is present that protects NP's interest. That is pretty standard stuff. Now that clause may be enforceable, non-enforceable or partially enforceable. You don't actually know until you get to court. All you have is your attorney's opinion, as he is the one who drew it up for you. Now these two companies may have a long history of working together, so this agreement just keeps getting pushed to the next game and updated as their is no competition when they put out the RFP since NP is the only player.
Also, in real life, departments in a company are not always in sync. Guys in software development department of a company aren't necessarily worried or cognizant of what's in a vendor contract. So, if they get an idea to do something in-house and then someone in legal department says, hey you better not do that or we might get sued because of our agreement with NP. Yes, this seems rational, reasonable, albeit speculative, reasoning.
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