Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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VI. ZM’S BREACH OF COVENANT NOT TO COMPETE IN HIS
EMPLOYMENT AGREEMENT WITH FRONTERA
20. Since his termination on January 15, 2020,30 ZM has continued to try and
unlawfully compete with Frontera in violation of his Employment Agreement with Frontera.31
Specifically, ZM has wrongfully “compete[d] with and usurped business opportunities of FRC
[Frontera] regarding oil and gas exploration, development, drilling, production, geophysical or
geotechnical work, seismic exploration, geophysical consulting, prospect development, prospect
promotion, or design, sale, fabrication, assembly, or operation of pipelines or refineries or the
marketing or distribution of liquid or gaseous hydrocarbons or hydrocarbon products (the
‘Company Opportunities’),” as prohibited by Paragraph 22(a)(iii) of his Employment
Agreement. Ex. 10.32
21. Under paragraph 22 of the Employment Agreement, ZM is also prohibited from
competing with Frontera, and in particular cannot “compete with Frontera during the Term of
Employment; or for three years after the Term of Employment.” See para. 22(a)(i)(ii), and iii.33
ZM’s employment ended on January 15, 2021 when he was terminated for cause,34 and he
cannot compete with Frontera before January 15, 2024.
22. Frontera is also entitled to injunctive relief. Paragraph 22(e) contains ZM’s
agreement that a breach or violation of the covenant not to compete by him:
“shall entitle the Company as a matter of right, to an injunction
issued by any court of competent jurisdiction, restraining any
further or continued breach or violation of his covenant. Such right
to an injunction shall be cumulative and in addition to, and not in
lieu of, any other remedies to which the Company may show itself
justly entitled.”35
Thus, Frontera, who owns the subject oil and gas interests, is entitled to a temporary injunction
preventing ZM from competing with these interests whether they are operated by FRGC or
FRUS, which are both wholly owned subsidiaries of Frontera, and the smoke screen thrown up
by ZM’s Motion to Dismiss should be disregarded by the Court.
23. ZM’s attack on the Employment Agreement he signed is unavailing. First, the
covenant not to compete is not overly broad as it is limited to specific exploration and production
activities spelled out in paragraph 22(a), it is also limited to Eastern Georgia where Frontera’s
interests are located, and three years is reasonable given that he was there operating for Frontera
for twenty years. ZM also argues that Frontera “should not be able to prevent ZM from
continuing to earn a living in a position he has held for over 20 years,” but it is undisputed he has
been terminated for cause from that position back on January 15, 2020.36 It is further unclear
what company he could be running at this point other than one of Frontera’s wholly-owned
subsidiaries or a fake Frontera company he has set up.