TRANSACTION TERMS: The purchase price of Paradigm is up to
The "firm consideration" consists of the following:
1. Cash at closing -
$9,288,112(including $1,600,000of a working capital balance sheet adjustment at closing). 2. Vendor Note - $1,182,786principal, with interest accruing at an annual rate of 3% payable quarterly in arrears with one third of the outstanding principal payable at the end of year two and the balance payable at the end of year three. The note is convertible at the time of repayment into SEB shares with the conversion price based on the ten day weighted average share price of SEB shares trading on the TSXV at the time of closing of the SEB/Paradigm transaction, and subject to the rules and policies of the TSXV. 3. SEB shares - $2,956,966of SEB shares based on the ten day weighted average trading price of SEB shares on the TSXV prior to the closing date. The shares are subject to a 36-month escrow provision, with shares being released every six months in equal amounts following the closing of the transaction. 4. 1,000,000 share purchase warrants to be issued to employees as a retention incentive, with a 48-month term and an exercise price equal to the weighted average of the trading price of the SEB shares for the ten trading days prior to the closing date, and subject to the rules and policies of the TSXV. The warrants have 36-month contractual escrow provisions vesting in equal amounts every six months.
The "additional consideration", payable in cash, consists of up to:
$1,774,179to be paid at the end of year three, subject to meeting a cumulative EBITDA of $8,870,898. 2. $591,393to be paid at the end of year four, subject to meeting a cumulative EBITDA of $11,827,864. 3. Excess performance consideration - 20% of excess EBITDA over an annual benchmark EBITDA of $2,956,966will be paid as a bonus pool for each year of four years. 4. If the cumulative EBITDA targets are reached prior to the three year and four year benchmarks, the additional consideration will be paid earlier.
The transaction remains subject to completion of definitive documents between the parties and approval by the TSXV.
PARADIGM'S STRATEGIC FIT WITH SEB:
-- Healthcare: Paradigm has provided IT services and ongoing support on numerous healthcare projects including electronic medical records, payor/provider registration, system integration expertise, insurance applications, acquisition integration projects and has key vendor relationships with numerous government and corporate clients in this sector. Clients include eHealth organizations, Ministries of Health, and Regional Health Authorities to mention a few. -- Public Sector: Paradigm maintains long term vendor relationships within multiple areas of government and government organizations, including crown corporations. A number of these organizations are excellent opportunities for implementation of SEB technology solutions. Major projects have been completed for provincial government ministries, provincial crown corporations and the Government of
Canada. The specific areas include: driver and vehicle licencing and insurance, justice, social services, education, agriculture, energy and resources, liquor retail and licencing, gaming, and land titles. -- Insurance: Paradigm has been involved in multiple technology projects in the insurance industry and has extensive ongoing client relationships. A full range of services was provided and major projects have been completed for national and international insurance companies and financial services companies headquartered in Manitobaand Saskatchewan. The specific business areas include: group health insurance, individual life insurance, casualty insurance, crop insurance, vehicle insurance, and investment portfolio management. SEB technology solutions and expertise have significant value added for automating numerous insurer business processes. -- Technology Expertise: Paradigm has key specialty skill sets and experience which are critical to managing the systems integration required to connect legacy data systems to new technology solutions while allowing seamless connectivity between the two environments. Most healthcare and benefits administration processes require this connectivity and systems integration expertise. -- Client References: Paradigm has numerous client references which carry substantial weight in responding to RFPs in both the government and corporate sectors. References are a critical ingredient of meeting RFP mandatory requirements as well as an indicator of successful projects. -- Delivery and Support: Paradigm provides local expertise and delivery capabilities along with ongoing support infrastructure to manage existing and future SEB client relationships in Western Canada. This is particularly critical with client outsourcing projects and fits well with SEB's "SaaS" business model.
ABOUT PARADIGM: Paradigm has a 23-year history of providing management and information technology consulting services to healthcare, insurance, financial services, public sector, telecom and energy clients. With over 150 billable consultants, primarily employee based, Paradigm is a market leader for delivering management consulting, portfolio/program/project management and application technology services to an enterprise level client base. Paradigm has a very deep portfolio of IP for its key client verticals which enables accelerated delivery of projects and maintains long term client relationships. Paradigm's staff has very strong accreditations in numerous technology disciplines which differentiate them in the marketplace. The majority of Paradigm's employees are shareholders. The "senior partner team" of six has over 180 years of combined industry expertise. Paradigm's services are as follows:
-- Portfolio, Program & Project Management: This area includes Consulting Services, Program and Project Management, Portfolio Management and Project Management Office. Paradigm is widely known for the Project Management services it provides to its customers. Not only can Paradigm provide Project Management resources that effectively manage the time, scope, and quality of projects, but also Paradigm is well known for rescuing projects that are off track, managing high profile and high- risk projects, and managing multiple projects concurrently.
Paradigm consultants have experience helping customers establish a Project Management Office ("PMO") as well as maintaining, assessing and recommending improvements to the PMO once it is in place.
-- Business Analysis: Paradigm provides a full range of Business Analysis services to support its customer's business. These services integrate with related disciplines such as Project Management,
Management Consulting, and IT Service Management to provide a full life-cycle solution to meet customer's business needs. Business Analysis identifies business needs and determines solutions to business problems. Solutions often include a systems development component, but also consist of process improvement or organizational change. -- Business Process Consulting: Paradigm has three areas of expertise within its Business Process Consultingoffering: Business Planning, Business Process Analysis and Design, and Continuous Improvement Process including Lean Six Sigma. Paradigm has extensive experience consulting in Business Process Management. Its consultants have worked with customers to implement BPM within their organizations including analyzing and documenting existing business processes, developing and implementing BPM plans, managing the changes and mentoring staff through the change process. -- Management Consulting: The Management consulting services consists of four areas of expertise: Strategic Planning, Efficiency Reviews, Organizational Change Management, and Procurement Service. Its consultants have an average of 18 years' experience in the information technology sector with expertise in a variety of industries including public sector, healthcare, insurance, utilities, telecommunications, and banking. -- Training: Paradigm offers its customers Best Practice accredited training, including PRINCE2(R), MSP(R), P3O(R), MoR(R) and MoP(R), as well as Agile Project Management. Paradigm offers both public and private courses for customers. -- Independent Project Review: Paradigm has a proven methodology for Project, Program and Portfolio Healthchecks, and it has provided this service for many of Public Sector clients. Specifically, it has been a service to either perform: 1) a readiness assessment on the organizations' aptitude for initiating a project/ program or portfolio 2) a health check of the Project Management Office, or the health of a specific project or 3) a rescue of the potentially troubled project by implementing corrective action. -- Application Development: Paradigm's Application Services include Application Architecture, Application Design and Development, and Application Support. It provides a full range of business application development and application management services. Its specialists provide services in a variety of hardware and software environments, following formal delivery guidelines and accepted methodologies. Paradigm is committed to following the standards for system development set out in the Software Engineering Institute'sCapability and Maturity Model for software, and it actively pursues other improvement initiatives, including Software Configuration Management, and Software Quality Assurance practices. -- Technology Management: This service offering is comprised of the following areas of expertise: Architecture, IT Operations Design, and ITSM Education Services. Paradigm offers a complete range of information technology architecture services as standalone engagements or as a component of a project or broader services initiative. From enterprise architecture at a strategic level, to project delivery architecture at a tactical level, Paradigm architects have the experience and skills to bring technology leadership to your organization.
ABOUT SEB: SEB's core expertise is managing specialized Big Data environments, of which healthcare is a major focus. SEB is a technology company providing, via a SaaS business model, software, solutions and services specializing in managing group benefit solutions and healthcare claims processing environments for corporate and government clients. Health Claims Processing alone is a
In the employee group benefits industry, SEB operates as a Third Party Administrator and Insurance Brokerage utilizing its software platform to provide "totally hosted PCI compliant supply chain solutions" for managing the complete group benefits business processes between insurers, clients, brokers, consultants, technology service providers and healthcare service providers. In healthcare claims processing, SEB also operates as a systems integrator utilizing its technology platform together with other technologies to provide customized, fully integrated solutions for specialized environments (e.g. travel claims, student benefits, hospitals, unique government applications, etc.). The technology and expertise deployed in this area also allows SEB to provide other related supply chain, systems integration and human resource solutions and services to the same clients.
Forward-Looking Statements: This news release is intended for information purposes only. Statements made in this news release may contain "forward looking" information about the company's future business prospects. These statements while expressed in good faith and believed to have a reasonable basis are subject to risk and uncertainties that could cause actual results to differ materially from those set forth or implied by such forward looking statements. Investors should consult a professional advisor before making any investment decision.
For further information about SEB, please visit www.seb-inc.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Smart Employee Benefits Inc. John McKimmPresident/Chief Executive Officer (416) 460-2817 email@example.com Smart Employee Benefits Inc. Shelly FrankVice-President, Marketing (888) 939-8885 x 358 firstname.lastname@example.org First Canadian Capital Corp. Dan Boase416-742-5600 or 1-866-580-8891 email@example.com Source: Smart Employee Benefits Inc.