EXHIBIT 10.3
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT
THIS
NONCOMPETITION AND CONFIDENTIALITY AGREEMENT is dated as of July10,
2008 (the “Effective Date”), by and between Digital
Angel Corporation d/b/a Digital Angel, a Delaware corporation
(“Seller”), and Sterling Hallmark, Inc., a California
corporation (“Purchaser”).
W I T
N E S S E T H T H A T:
WHEREAS,
Purchaser and Seller, among others, have entered into an agreement
(the “Stock Purchase Agreement”) for the purchase by
Purchaser of all of the issued and outstanding stock of Computer
Equity Corporation, a Delaware corporation, (“CEC”)
consisting of one hundred (100) shares of $.001 par value
common stock (the “Shares”) and its wholly owned
subsidiary, Government Telecommunications, Inc., a Virginia
corporation (“ GTI ”);
WHEREAS,
Purchaser desires that Seller shall keep certain information
confidential and shall not compete with Purchaser following the
acquisition of Shares pursuant to the Stock Purchase Agreement on
the terms and conditions set forth herein; and
WHEREAS,
Purchaser has agreed to pay certain amounts, as more fully set
forth in Paragraph 2 hereof, to Seller in order to secure
such agreement;
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants set forth in this Agreement, the parties hereto agree as
follows:
1.
Confidentiality and Noncompetition .
1.01. Seller
agrees expressly, as an inducement to the performance by Purchaser
of its obligations under the Stock Purchase Agreement and in
consideration of the payment to be made to Seller pursuant to
Paragraph 2 hereof, that for the Term of this
Agreement, except as required by applicable law or order, Seller
will not disclose to any unauthorized person or use for its own
account, anywhere in the Restricted Territory any of the
Confidential Information without the prior written consent of
Purchaser’s Board of Directors. Seller acknowledges that the
continued success of Purchaser is largely dependent upon
maintaining the confidentiality of such information and preventing
its disclosure to competitors and other third parties.
1.02. Seller
agrees that for the Term of this Agreement, it will not own,
manage, operate, control, be employed by, participate in, or
otherwise engage in, or permit its name to be used by or in
connection with any business engaged in the development, sale,
licensing, or leasing of telecommunications and information
services that engages in such activity within the Restricted
Territory.
1
1.03. “
Confidential Information ” includes, but shall not be
limited to, information pertaining to research and development of
new product designs, and sales and marketing information of
Purchaser, including trade secrets, software programs, and customer
data and shall include any information of a similar nature
hereafter identified in this Agreement as confidential or
proprietary. The term “ Confidential Information
” does not include information that (i) has become a
part of the public domain other than as a result of its wrongful
disclosure by Seller, (ii) was available on a non-confidential
basis prior to its disclosure, or (iii) is or hereafter
becomes lawfully obtainable from other sources without an
obligation of confidentiality. “ Customer data ”
means any information pertaining to a customer, distributor,
supplier, or other person or entity contacted to utilize
Purchaser’s services or purchase or license its products,
including, but not limited to, preferences, pricing information,
service needs, software, and similar insider knowledge of such
parties’ requirements obtained by Purchaser at any time.
“ Restricted Territory ” mea
