Filed by Bowne Pure Compliance





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.


 


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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” means the United States, its territories and military bases.



1.04. Seller further agrees that upon termination of this Agreement it will destroy any
records, papers, letters, or other data and information with respect to Confidential Information
then in its possession or control, unless necessary to comply with applicable legal and regulatory
requirements, as well as documented internal policy.



2. Non-Solicitation. During the Term of this Agreement, Seller agrees that, except
with the prior written consent of Purchaser’s Board of Directors, it will not directly or
indirectly (i) solicit, divert, attempt to take away or interfere with any customer, client, or
distributor of Purchaser, or (ii) induce or attempt to induce any employee, agent or independent
contractor who was employed by Purchaser, CEC or GTI immediately prior to the Effective Date to be
an employee, agent, independent contractor, or otherwise of Seller. Seller shall not be deemed to
have violated clauses (i) or (ii) this Paragraph 2 solely as a result of making any general
solicitation undertaken in the ordinary course of business and not specifically targeting such
persons.



3. Term; Compensation. The term of this Agreement shall be two (2) years from the
Effective Date of this Agreement (the “Term”). Seller shall receive $100 in consideration of this
Agreement in each of the two years.



4. Injunctive Relief. Seller agrees that in the event of a breach of this Agreement
by Seller, the remedy at law for damages would be inadequate and Purchaser may obtain injunctive
relief.




5. Miscellaneous.




5.01. Sole Agreement. This Agreement and the documents delivered pursuant to
or in connection with this Agreement constitute the sole and only agreement of the parties
hereto and supersede any prior understanding or written or oral agreements between the
parties. No amendment, modification, or alteration of the terms hereof shall be binding
unless it is in writing, dated subsequent to the date hereof and duly executed by the parties hereto.


 


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5.02. Successors. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns.




5.03. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which shall constitute one and the
same instrument. Facsimile transmission (which shall be deemed to include the e-mail
delivery of documents in Adobe pdf or similar static image format) of any signed original
counterpart and retransmission of any signed facsimile transmission shall be deemed the same
as the delivery of an original.




5.04. Extensions and Waivers. Each party to this Agreement may, by written
notice to the other, (i) extend the time for the performance of any of the obligations or
other acts of the other party and (ii) waive performance of any of the obligations of the
other party. No such written waiver by the parties hereto of any default or breach of any
term or condition of this Agreement shall be deemed to be a waiver of any other breach of
this Agreement or any other term or condition contained herein.




5.05. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Delaware.




5.06 Notices. Any notice required or permitted to be given hereunder shall be
in writing and shall be delivered personally or sent by certified mail, postage prepaid, as
set forth below:




	 	(a)	 	If to Seller:

	 
	 	 	 	Digital Angel Corporation

1690 S. Congress Avenue, Suite 201

Delray Beach, Florida 33445

Attn: Lorraine Breece, CFO

Email: lbreece@digitalangel.com

Facsimile: 561-276-0977

	 
	 	 	 	With a copy to:

	 
	 	 	 	Patricia Petersen at the same address and fax number above

Email: ppetersen@digitalangelcorp.com





 


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	 	(b)	 	If to Purchaser:

	 
	 	 	 	Sterling Hallmark, Inc.

27131 Calle Arroyo, Suite 1705

San Juan Capistrano, California 92675

Attn: Kevin Kelly

Email: pkkelly1@cox.net

Facsimile: 949-248-8926

	 
	 	 	 	with a copy to:

	 
	 	 	 	Weintraub Law Group PC

10085 Carroll Canyon Road

Suite 230

San Diego, California 92131

Attn: Richard A. Weintraub, Esq.

Email: rick@weintraublawgroup.com

Facsimile: 858-566-7015







5.07. Severability. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any other
provision hereof and this Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.




5.08. Captions. The captions in this Agreement are solely for convenient
reference and shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.




5.09. Gender and Number. All personal pronouns used in this Agreement shall
include the other gender whether used in the masculine or feminine or neuter gender, and the
singular shall include the plural whenever and as often as may be appropriate.




5.10. Further Assurances. The parties hereto agree that they shall deliver
all further documents and do all further acts necessary and reasonably desirable to
consummate the transactions contemplated by this Agreement.



[Signatures on Following Page]



 


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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized
officers as of the date first above written.



	 	 	 	 	 
	 	 	“PURCHASER”
	 
	 	 	 	 
	 	 	STERLING HALLMARK, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kevin Kelly
	 

	 	 	 	 
	 

	 	Name:
	 	Kevin Kelly
	 

	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	“SELLER”
	 
	 	 	 	 
	 	 	DIGITAL ANGEL CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Lorraine M. Breece
	 

	 	 	 	 
	 

	 	Name:
	 	Lorraine M. Breece
	 

	 	 	 	 
	 

	 	Title:
	 	Senior Vice President and Chief Financial Officer