Personally, I would just ignore clauses like this. I know of no examples of stuff like this ever being held up in court. At least not at our level. You might have to worry if you were an executive or something.
They really believe that if you are working on something then you should be working on something for them 24/7 (without overtime, of course)
{long personal crap fest story here}
I think these contracts, for anyone, junior, senior, or exec, are quite unproductive. Outside stimulation makes us, programmers and designers, better at what we do.
If I only ever worked on work related projects, I wouldn't be able to provide the kind of input I'm paid for. The contract writers know this, when they stop to think about it, but they are very scared.
Because, if I had requirements like that in my contract, I don't think I could work for that company, even if I were in very real need of money. I have entrepreneal plans of my own, and they'd start out as just moonlighting.
They even got their knickers in a twist when they learned I work on my own projects and help out friends and OSS, in my own time, on my own equipment, but there's not thing one they can do about it.
I've also had a friend be told that he would need to give up his personal, part time, income generating website in order to take a particular job (not here). The website business was not in competition with or even the same general industry as the job.