The applicant, Project Freeway Inc., sold shares of a business to the respondent, ABC Technologies Inc., under a share purchase agreement that included an earn-out provision.
The agreement contained an acceleration clause that would trigger immediate payment of the full earn-out if the respondent sold a material portion of the business's assets.
Following the transaction, the respondent entered into sale-leaseback transactions for real property and a factoring arrangement for accounts receivable.
The applicant argued these transactions triggered the acceleration clause, but the court found that these were ordinary course financing transactions that did not impact the earn-out targets.
Consequently, the court dismissed the application and ordered the applicant to pay costs.
