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TORONTO, ONTARIO -- (Marketwired) -- 08/26/14 -- Smart Employee Benefits Inc. ("SEB") (TSX VENTURE:SEB) is a technology company providing, via a SaaS business model, "business processes software solutions and services" to corporate and government clients with specialty practices focused on "managing group benefit solutions and health claims processing environments." SEB, through its wholly owned subsidiary SOMOS Consulting Group Ltd., is pleased to announce it has entered into a letter of agreement to acquire Paradigm Consulting Group Inc. and PCGI Consulting Services (collectively referred to as "Paradigm"). Paradigm is a very strategic acquisition for SEB, bringing significant government and corporate client relationships along with technical skills and expertise, which allow SEB to compete more effectively in Western Canada, particularly in the areas of healthcare and benefits administration and adjudication. SEB has made significant progress in developing a presence in Western Canada and Paradigm consolidates SEB's strength, providing local presence and delivery capability to service and manage important client relationships in this marketplace.

TRANSACTION TERMS: The purchase price of Paradigm is up to $15,793,436, made up of firm consideration of $13,427,864 and additional consideration of up to $2,365,572 if certain performance targets are achieved. In addition 1,000,000 share purchase warrants are to be issued for employee retention. Paradigm has no debt and has a strong working capital position.

The "firm consideration" consists of the following:


1.  Cash at closing - $9,288,112 (including $1,600,000 of a working capital
    balance sheet adjustment at closing). 
2.  Vendor Note - $1,182,786 principal, 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 - $2,956,966 of 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.  $1,774,179 to be paid at the end of year three, subject to meeting a
    cumulative EBITDA of $8,870,898. 
2.  $591,393 to 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 $2,956,966 will 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.

MANAGEMENT COMMENTS:

John McKimm, President/CEO/CIO of SEB states, "Paradigm's experience and enviable references add to our growing Canadian presence, particularly in Saskatchewan and Manitoba, both long time innovators of healthcare services. This acquisition is in line with our focus on deepening client relationships in government and healthcare in Western Canada. Paradigm brings both important client relationships and technology expertise that add to SEB's suite of solutions and services, enhancing SEB's technology offerings and significantly increasing SEB's delivery capability to corporate and government sectors in Western Canada. SEB has substantial client opportunities in Western Canada for its technology solutions and the Paradigm acquisition is expected to significantly increase the success of these opportunities. Paradigm's executive management and employees are very experienced and highly regarded in the marketplace. The acquisition of Paradigm is expected to increase consolidated SEB sales to over $60.0 million annually, and contribute substantially to the overall profitability of the SEB Group. Paradigm has annual revenue of approximately $24 million and a track record of substantial profitability." Mr. McKimm continues "Healthcare systems and software for benefits management have not kept up with the evolution of technology in other industries. SEB's focus has been on utilizing our technology expertise and knowledge, in managing and transacting data in other industry sectors, to create high value-added end-to-end software solutions and services which provide healthcare and benefits clients with more cost-effective and flexible technology solutions, enhanced automation, reduced error rates and allow the real-time detailed reporting required to make informed business decisions. Paradigm enhances SEB's delivery and support of these solutions in the marketplace, particularly in western Canada."

Mark Hustak, President/CEO of Paradigm states, "Having grown unique specialties in healthcare IT and managing and transacting big data, SEB has the ability to significantly deepen our expertise in our current markets and beyond. With SEB, we are poised for delivery of high value-add solutions that satisfy customers' most relevant needs in the growing demand for immediate Business Intelligence around Big Data." He continues, "Paradigm has been evaluating its options during the last year to expedite our growth prospects. Over the past 23 years, Paradigm has provided management consulting, change management and application and IT services to corporate and government clients. Paradigm has over 150 billable consultants, mostly employees, who service a legacy client base where the top 10 clients have an average engagement history of over 12 years. Paradigm has unique specialty practices and strong client relationships in healthcare, government, technology integrators, insurance and utilities. The SEB Group gives Paradigm the opportunity to incorporate advanced software and solutions in its sales mix. These solutions will have significant value for the majority of Paradigm's client base. SEB has made significant progress in establishing a footprint in Western Canada and Paradigm gives SEB the local presence and delivery capability to expedite and expand this footprint. The combination of Paradigm and SEB significantly enhances the opportunity for both companies to become a major competitor in Western Canada in providing technology to clients, particularly solutions for healthcare and benefits and claims management."

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 Manitoba and 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 Consulting offering: 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®, MSP®, P3O®, MoR® and MoP®, 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 Health checks, 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's Capability 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 $60.0 plus billion industry, of which over $37.0 billion is employee group benefit plans and over $25.0 billion of other healthcare benefit claims (e. g. workers' compensation claims, travel benefits, various federal and provincial government programs, dental associations, drug associations, etc.).

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.

Neither the 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.

Contacts:
Smart Employee Benefits Inc.
John McKimm
President/Chief Executive Officer
(416) 460-2817
john.mckimm@seb-inc.com

Smart Employee Benefits Inc.
Shelly Frank
Vice-President, Marketing
(888) 939-8885 x 358
shelly.frank@seb-inc.com
www.seb-inc.com

First Canadian Capital Corp.
Dan Boase
416-742-5600 or 1-866-580-8891
dboase@firstcanadiancapital.com

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