Employment agreements like this are all too common these days - especially in technology related industries (and even more so in the game development industry). Most companies I've worked at have wanted something like this signed, with a lot having even worse terms (one even being described as "the worst they've ever seen" by a government pro-employee agency which I forget the name of now).

The general rule is that they include these terms mostly to scare you, and partly "just in case" they actually get held up in court (which is very unlikely, but their lawyers tell them that it can't hurt, so it gets included). As has been already stated, you can always cross out the paragraphs you don't like, initial them, sign the contract and hand it back to them. The contract probably wouldn't be legally binding at that point anyway (unless they also initial the alterations), in which case it's a moot point, no?