Allie, Barb, and Cate were business students who came up with a better design for a mousetrap. They formed a corporation, ABC Inc., to produce and market the mousetrap and the company set up its place of business in Richmond. Each received equal shares and all were appointed directors of the corporation. Additionally, all signed employment contracts with the corporation.

A dispute arose between Allie and Barb and Cate.Allie was not showing up to work in the morning shifts and this was causing problems for the company.Allie was pregnant and suffering from morning sickness.Barb and Cate decided that further investments from the three was necessary to fully market their product.Allie refused to invest any more money.As a result Barb and Cate decided to incorporate another company which was used to market the newly designed mouse trap overseas.Allie was not told of this company.

The dispute between the three business students deteriorated.Barb and Cate did not tell Allie of the next annual general meeting and she was voted off the board of directors. The remaining directors immediately terminated her employment with the corporation stating they had just cause to end the employment given her tardiness and poor attitude at work.

Prior to Allie's departure, Barb and Cate convinced Allie to sign an agreement that included the following clause:

"The undersigned hereby agrees not to be involved in any capacity whatsoever in the mousetrap or a similar business within 10 kilometers of ABC Inc.'s premises after leaving the employment of ABC Inc. for a period of 3 years."

Allie became very upset and she joined another mousetrap company based in Surrey selling mousetraps in the entire lower mainland.

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