ERA Carbon Offsets Ltd.

TSX VENTURE : ESR


ERA Carbon Offsets Ltd.

November 08, 2012 09:15 ET

ERA Carbon Offsets Ltd Announces Signing of Definitive Agreements for the Acquisition of Offsetters Clean Technology and Carbon Credit Corp.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 8, 2012) - ERA Carbon Offsets Ltd. ("ERA" or the "Company") (TSX VENTURE:ESR) is pleased to announce that it has entered into three definitive agreements to effect the purchase of Offsetters Clean Technology Inc. ("Offsetters") and Carbon Credit Corp. ("CCC") (the "Acquisition") as first announced on September 17, 2012.

The closing of the Acquisition (the "Closing") is anticipated to occur concurrently with the closing of the two private placements recently announced by the Company (the "First Private Placement" and the "Second Private Placement") on November 30, 2012. In the event of an unforeseen delay, the Company will have until December 31, 2012 to complete the Closing.

THE WOOLLARD AGREEMENT:

The Company has entered into a definitive agreement (the "Woollard Agreement") with Donovan Woollard whereby the Company will purchase Woollard's minority interest in Offsetters in exchange for the issuance to Woollard of 200,000 of its common shares (the "Woollard Shares").

The Woollard Shares will be subject to a four month hold period from Closing of the Acquisition under the policies of the TSX Venture Exchange (the "Exchange") and are further subject to contractual requirements that Woollard provide notice and a right of first refusal to the Company of any intent to sell the Woollard Shares.

THE TANSEY AGREEMENT AND APPOINTMENT OF TANSEY AS PRESIDENT, CEO AND DIRECTOR:

The Company has entered into a definitive agreement (the "Tansey Agreement") with James Tansey ("Tansey") whereby the Company will purchase Tansey's minority interest in Offsetters in exchange for and conditional upon:

(1) The issuance to Tansey of 2,000,000 (the "Tansey Shares") of its common shares;
(2) The assignment to the Company of Tansey's management agreement with a third party and Offsetters;
(3) The participation of Tansey in either the First Private Placement or the Second Private Placement, or both, for a total of 1,000,000 units; and
(4) The appointment of Tansey to the positions of President, CEO and Director of the Company.

The Tansey Shares will be subject to a four month hold period from Closing of the Acquisition under the policies of the Exchange and are further subject to contractual resale restrictions such that 25% of the Tansey Shares shall be free of contractual resale restrictions on each of the date that is: four (4) months from Closing, six (6) months from Closing, twelve (12) months from Closing and eighteen (18) months from Closing.

Tansey was appointed a Director of the Company at the Company's annual general meeting of shareholders October 25th, approximately five (5) weeks after the terms of the Tansey Agreement were negotiated and finalized.

It is anticipated that Tansey will be appointed as President and CEO on Closing. Until that time, the Board of Directors of the Company has appointed Dr. Robert Falls, a Director of the Company, to serve as interim CEO.

ADDITIONAL SHARE PURCHASE AGREEMENT:

The Company has entered into a definitive agreement (the "Share Purchase Agreement") with a third party seller (the "Seller") to purchase all of the Seller's shares of Offsetters (the "Offsetters Shares") and CCC (the "CCC Shares").

In consideration of the purchase of the CCC Shares and the Offsetters Shares from the Seller, the Company shall, upon Closing, issue to the Seller share purchase warrants (the "Warrants") to purchase 2,000,000 Common shares in the authorized share structure of ERA (the "Warrant Shares"), exercisable at a price of $0.40 per Common share until March 31, 2017. The Company shall also make cash payments to the Seller, as follows:

(i) upon the Closing, the Company will pay to the Seller the sum of $500,000 (the "First Cash Payment");
(ii) on or before December 30, 2013, the Company will pay the Seller the greater of either (A) $1,500,000 (the "Second Cash Payment") or (B) the sum of 15% of the net cash it receives from projects unrelated to the Company's current operations (the "Net Cash Received" and the "15% Payment") in 2013 and 35% of commissions from the Great Bear Project (a "GBI Payment") in 2013;
(iii) on or before December 30, 2014, the Company will pay the Seller the greater of either (A) $500,000 (the "Third Cash Payment") or (B) the sum of the 15% Payment for the Net Cash Received in 2014 and the GBI Payment for 2014;
(iv) on or before December 30, 2015, the Company will pay the Seller the greater of either (A) $500,000 (the "Fourth Cash Payment") or (B) the sum of the 15% Payment for the Net Cash Received in 2015 and the GBI Payment for 2015;
(v) on or before December 30, 2016, ERA will pay the Seller the greater of either (A) $500,000 (the "Fifth Cash Payment") or (B) the sum of the 15% Payment for the Net Cash Received in 2016 and the GBI Payment for 2016 (in accordance with the Calculation Statement for that period); and
(vi) 15% of Net Cash Received and 35% of GBI Commissions during the period of December 31, 2016 and March 31, 2017 attributable to revenues accrued in 2016 to the extent that the sum of (A) such amount and (B) 15% of the Net Cash Received in 2016 and the GBI Payment for 2016, exceeds the Fifth Cash Payment (the "2016 Adjustment"), provided that the above-noted payments in the aggregate shall not be less than the Minimum Purchase Price of $3,500,000, and not more than the Maximum Purchase Price of $6,000,000.

In addition, the Seller will receive, subject to certain exceptions, 20% of any equity financing of the Offsetters and CCC businesses for the term of the Share Purchase Agreement which will be applied against the Maximum Purchase Price obligation.

The calculation of the terms "Net Cash Received", "GBI Payment" and other terms and conditions are more fully discussed in the Share Purchase Agreement, which the Company will file as a material change report on the SEDAR system.

Each of the Woollard Agreement, the Tansey Agreement and the Share Purchase Agreement is subject to the approval of the Exchange.

THE FIRST PRIVATE PLACEMENT AND THE SECOND PRIVATE PLACEMENT:

The Company wishes to announce that the First Private Placement, being a private placement of 2,000,000 units at a price of $0.11 per unit (each unit comprised of one common share and one share purchase warrant exercisable for a period of two years at an exercise price of $0.17) was conditionally accepted by the Exchange on October 2, 2012. The Company notes that the original announcement of the First Private Placement stated that the warrant exercise price was $0.11. It is $0.17.

Proceeds of the First Private Placement are $220,000.

The Company wishes to announce that the Second Private Placement, being a private placement of 1,500,000 units at a price of $0.13 per unit (each unit comprised of one common share and one share purchase warrant exercisable for a period of four years at an exercise price of $0.17) was conditionally accepted by the Exchange on October 22, 2012.

Proceeds of the Second Private Placement are $195,000.

The First Private Placement and the Second Private Placement are anticipated to be closed concurrently with the Closing of the Acquisition.

All of the securities issued as part of the First Private Placement and the Second Private Placement (and all shares issued upon the exercise of warrants issued as part of those private placements) will be subject to applicable Exchange hold periods of four (4) months from the date of Closing.

Incentive Stock Options Set

The Company also wishes to announce that it has set aside 1,400,000 incentive stock options for its Board of Directors, employees and consultants to the company at an exercise price of $0.21 per share for a period of 5 years.

Robert Falls, Ph.D., R.P.Bio., Chairman and CEO

ERA Carbon Offsets Ltd.

About ERA Carbon Offsets Ltd.

A pioneer in carbon offset projects based on forest conservation and restoration, ERA has delivered over two million tonnes of carbon offsets to the voluntary market from a variety of international forestry based projects. The company's Community Ecosystem Restoration Program ("CERP") began in 2005 in British Columbia, Canada, and has delivered large scale restoration of riparian ecosystems throughout the Lower Mainland of British Columbia. ERA's successful project development activities include the award winning Darkwoods and Denman Island forest carbon projects, the first REDD concessions in the Democratic Republic of Congo in central Africa and Improved Forest Management projects in the United States which are expected to deliver ARB compliant tonnes for the California market beginning in 2013. Our activities span Canada, Africa, the United States and New Zealand. ERA's carbon offset projects are validated and verified to ISO-14064, CCBA, PFSI-VER, CAR and VCS standards and sell into voluntary and pre-compliance carbon markets. ERA's clients and product users include, Catalyst Paper, Rolling Stone Magazine, HSE - Entega, Forest Carbon Group AG, and Shell Canada Limited.

Additional information about ERA can be found on the corporate website: www.eraecosystems.com

Additional information on ERA can be found on the corporate website www.eracarbonoffsets.com or by contacting investor@eracarbonoffsets.com.

FORWARD LOOKING STATEMENTS: This document includes forward-looking statements as well as historical information. Forward-looking statements include, but are not limited to, the continued advancement of the company's general business development, research development and the company's development of forest-based carbon offsets. When used in this document, the words "anticipate", "believe", "estimate", "expect", "intent", "may", "project", "plan", "should" and similar expressions may identify forward-looking statements. Although ERA Carbon Offsets Ltd. believes that their expectations reflected in these forward looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include fluctuations in the marketplace for the sale of carbon credits, the inability to implement corporate strategies, the ability to obtain financing and other risks disclosed in our filings made with Canadian Securities Regulators.

NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

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