SEB Smart Employee Benefits Inc

Co-operators Financial Services Limited (“Co-operators”), a wholly owned subsidiary of The Co-operators Group Limited, and Smart Employee Benefits Inc. (TSXV: SEB) (OTCQB: SEBFF) (“SEB”) announced today that they have entered into an arrangement agreement (the “Arrangement Agreement”) dated January 3, 2023 pursuant to which Co-operators will, indirectly through its wholly-owned subsidiary, acquire all of the issued and outstanding common shares of SEB (“SEB Shares”) by way of a statutory plan of arrangement (“Plan of Arrangement”) under the Business Corporations Act (Ontario) (the “Transaction”).

Pursuant to the Arrangement Agreement, Co-operators will acquire all of the issued and outstanding SEB Shares, other than those already owned by Co-operators, at a purchase price of $0.30 in cash per SEB Share (the “Purchase Price”), representing a total equity value of approximately $89.1 million (the “Equity Value”). The Purchase Price represents a 76.5% premium to the closing price of SEB common shares on December 30, 2022, and an 80.9% premium to the 20-day volume weighted average closing price as of the end of trading on December 30, 2022. Co-operators will incur a cash outlay of approximately $55.5 million, representing the Equity Value less (i) the value of the Debentures (as defined below) and the SEB Shares held by Co-operators, collectively valued at approximately $31.1 million; and (ii) approximately $2.5 million from options proceeds.

States Joan Ganas, Vice President of Group Benefits at Co-operators, “This is a really exciting opportunity for Co-operators, as employers and government bodies increase their benefits spending, we believe that SEB possesses the capabilities and track record to address new challenges and continue to deliver high-value solutions. We are confident that SEB is well-positioned to expand its offerings to meet the needs of its clients. Their proven expertise in technology and their ability to fully integrate, customize, and manage solutions are perfectly aligned with the strategic direction of our current Group Benefits business model.”

States John McKimm, President, Chief Executive Officer and Chief Information Officer of SEB, “We have a strong partner in Co-operators. This transaction will boost our innovation agenda, accelerate our growth, and unlock new value for our clients. SEB executive management and employees are excited and committed to the next phase of our growth with Co-operators. We understand that Co-operators appreciates the core expertise of SEB in designing, implementing, automating and managing complex business processes and the value of our proprietary products, solutions and services portfolio. SEB is well positioned to execute the digital transformation initiatives across multiple industry sectors.”

States Mohamad El Chayah, Chief Operating Officer of SEB and President, Chief Executive Officer of SEB Administrative Services Inc. (“SEB Admin”), “As we start this new chapter, we would like to express our heartfelt appreciation to our shareholders, customers, employees, and Board of Directors for their overwhelming support and confidence in SEB’s vision and mission. SEB has built a tremendous reputation for its ability to innovate, deliver and execute large and complex projects. We have been strategic partners with Co-operators since 2019 and together we will continue to re-imagine and develop innovative products and solutions for our clients.”

Special Committee and Board Approval

SEB appointed a special committee of independent directors (the “SEB Special Committee”) to consider the Transaction, as well as other alternatives available to SEB, and to make a recommendation with respect to the Transaction. Based on the unanimous recommendation of the SEB Special Committee, and after consultation with its outside financial and legal advisors, the board of directors of SEB (the “SEB Board of Directors”) (with interested directors abstaining) unanimously determined that the Transaction is in the best interest of SEB and fair to the SEB Shareholders (other than Co-operators and its affiliates) and approved the Arrangement Agreement. The SEB Board of Directors intends to recommend that SEB Shareholders vote in favour of the Transaction.

In making their respective determinations, the SEB Special Committee and the SEB Board of Directors considered, among other factors, the fairness opinion received from Echelon Capital Markets (a division of Echelon Wealth Partners Inc.) (“Echelon”) which states that, as of the date of such opinion and subject to the assumptions, limitations and qualifications set out in such opinion, and such other matters as Echelon considered relevant, the Purchase Price to be received pursuant to the Transaction is fair, from a financial point of view, to the SEB Shareholders (other than Co-operators and its affiliates).

The Transaction has also been unanimously approved by the board of directors of Co-operators.

Transaction Details

Under the terms of the Arrangement Agreement, the Transaction will be effected by way of the Plan of Arrangement whereby Co-operators will, indirectly through its wholly-owned subsidiary, acquire all of the issued and outstanding SEB Shares (other than those SEB Shares owned by Co-operators). Following closing of the Transaction, the SEB Shareholders will be entitled to receive the Purchase Price in exchange for each SEB Share held by such SEB Shareholder immediately prior to the effective time of the Plan of Arrangement.

The consummation of the Transaction will be subject to conditions customary for transactions of this nature, including, among others: (i) the approval of 66.67% of votes cast by the SEB Shareholders (including Co-operators and its affiliates) at a special meeting of SEB Shareholders (the “SEB Special Meeting”); (ii) the approval of a simple majority of the votes cast by SEB Shareholders excluding Co-operators, its affiliates and any other “interested party” (as defined in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (“MI 61-101”)) (the “Minority Shareholders”) at the SEB Special Meeting; (iii) approval of the Ontario Superior Court of Justice; and (iv) approval of the TSX Venture Exchange. Completion of the Transaction is not subject to any financing condition and the aggregate Purchase Price will be funded from Co-operators’ current cash balance.

Co-operators and SEB have provided representations and warranties customary for a transaction of this nature and SEB has provided customary interim period covenants regarding the operation of its business in the ordinary course. In addition, the Arrangement Agreement includes customary deal protection provisions (including fiduciary out provisions), including that SEB will not solicit or initiate any discussion regarding any other business combination or similar transaction. SEB has also granted Co-operators the right-to-match any superior proposal and will pay a termination fee of $4.5 million to Co-operators if the Arrangement Agreement is terminated in certain circumstances, including if SEB recommends or approves an alternative acquisition proposal or enters into an agreement with respect to a superior proposal or breaches its non-solicitation covenants. SEB has also agreed to make an expense reimbursement payment of $1.0 million to Co-operators if the Arrangement Agreement is terminated in certain circumstances where the Transaction is not approved at the SEB Special Meeting, provided that the aggregate of the termination fee and expense reimbursement shall not exceed $4.5 million.

SEB expects to hold the SEB Special Meeting on or around the end of February 2023. The Transaction is expected to close in the first quarter of 2023, subject to receipt of shareholder and court approvals and satisfaction of the closing conditions under the Arrangement Agreement. The terms and conditions of the Transaction will be disclosed in greater detail in a management information circular of SEB for the SEB Special Meeting (the “SEB Circular”) that will be mailed to SEB Shareholders. Copies of the Arrangement Agreement and of the SEB Circular will be filed by SEB with Canadian securities regulators and will be available on the SEDAR profile of SEB at www.sedar.com. SEB Shareholders are urged to read those and other relevant materials when they become available.

Following completion of the Transaction, SEB will continue to operate as a stand-alone entity, providing leading-edge benefits solutions and technology services to the industry.

Voting Support Agreements

The directors and certain senior officers of SEB who collectively own SEB Shares, RSUs, and options representing an approximately 24% voting interest in SEB have entered into voting support agreements with Co-operators pursuant to which, subject to certain terms and conditions, they have agreed to vote all of their SEB Shares in favour of the Transaction at the SEB Special Meeting.

Multilateral Instrument 61-101

The Transaction may be considered a “business combination” subject to MI 61-101 and, as a result, minority shareholder approval by the Minority Shareholders will be required for the Transaction. The Transaction will be exempt from the formal valuation requirement of MI 61-101 as SEB is not listed on a specified market set out in section 4.4(1)(a) of MI 61-101.

Transaction Advisors

TD Securities Inc. is acting as financial advisor to Co-operators and Fasken Martineau DuMoulin LLP is acting as legal counsel to Co-operators. Echelon Capital Markets is acting as financial advisor to SEB and Harris + Harris LLP is acting as legal counsel to SEB. WeirFoulds LLP is acting as legal counsel to the SEB Special Committee.

About Co-operators

The Co-operators Group Limited (together with its subsidiaries, “Co-operators Group”) is a leading Canadian financial services co-operative, offering multi-line insurance and investment products, services, and personalized advice to help Canadians build their financial strength and security. Co-operators Group has more than $61.5 billion in assets under administration. Co-operators Group has been providing trusted guidance to Canadians for the past 76 years and is well known for its community involvement and its commitment to sustainability. Achieving carbon neutral equivalency in 2020, Co-operators Group is committed to net-zero emissions in its operations and investments by 2040, and 2050, respectively. Co-operators Group is ranked as one of the Corporate Knights' Best 50 Corporate Citizens in Canada.

For more information, please visit: www.cooperators.ca.

Media Contact: media@cooperators.ca

About SEB

SEB is an Insurtech company focused on Benefits Administration Technology driving two interrelated revenue streams – Benefits Solutions and Technology Services. SEB is a proven provider of leading-edge IT and benefits processing software, solutions and services for the Life and Group benefits marketplace and government. SEB designs, customizes, builds and manages mission critical, end-to-end technology, people and infrastructure solutions using SEB’s proprietary technologies and expertise and partner technologies. SEB manages mission critical business processes for over 150 blue chip and government accounts, nationally and globally. Over 90% of SEB’s revenue and contracts are multi-year recurring revenue streams contracts related to government, insurance, healthcare, benefits and e-commerce. SEB’s solutions are supported nationally and globally by over 600 multi-certified technical professionals in a multi-lingual infrastructure, from multiple offices across Canada and globally.

SEB’s solutions include both software and services driven ecosystems including multiple SaaS solutions, cloud solutions & services, managed services offering smart sourcing (near shore/offshore), managed security services, custom software development and support, professional services, deep systems integration expertise and multiple specialty practice areas including AI, CRM, BI, Portals, EDI, e-commerce, digital transformation, analytics, project management to mention a few. SEB has more than 20 strategic partnerships/relationships with leading global and regional technology and consulting organizations.

For more information, please visit: www.seb-inc.com

Media and Investor Contact:

John McKimm President, CEO & CIO of SEBOffice: (888) 939-8885 x 2354 Cell: (416) 460-2817 john.mckimm@seb-inc.com www.seb-inc.com	Mohamad El Chayah COO of SEB President & CEO of SEB Admin Cell: (416) 418-0619 mohamad.elchayah@seb-admin.comwww.seb-admin.com

Early Warning Information

This press release is also being issued pursuant to National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues in connection with the Transaction. Co-operators currently owns (i) two senior secured convertible debentures of SEB with an aggregate principal amount of $25 million (collectively, the “Debentures”) and (ii) 3,555,467 SEB Shares. The Debentures are convertible at the option of Co-operators, at any time, into SEB Shares at a conversion price of $0.25. Assuming full conversion of the Debentures, Co-operators would own approximately 103,555,467 SEB Shares, representing approximately 37.6% of the issued and outstanding SEB Shares immediately prior to the Transaction and approximately 34.9% of the SEB Shares on a fully diluted basis (which includes all options that are in-the-money at the Purchase Price). Following completion of the Transaction, Co-operators will beneficially own 100% of the issued and outstanding SEB Shares. An early warning report will be filed by Co-operators in accordance with applicable securities laws and will be available on SEDAR at www.sedar.com or may be obtained directly from Co-operators upon request by contacting Alec Blundell, Executive Vice-President and Chief Operating Officer, Co-operators Life Insurance Company and President and Chief Operating Officer, CUMIS at 306-347-6218 ext. 606218.  

Cautionary Note Regarding Forward‐Looking Information

Certain information in this news release constitutes “forward‐looking information” within the meaning of applicable Canadian securities laws. All forward‐looking information in this news release is expressly qualified by this cautionary statement. Any information or statements that are contained in this news release that are not statements of historical fact may be deemed to be forward‐looking information, including, but not limited to, statements in this news release with regards to: statements relating to the Transaction and the expected terms, timing and closing of the Transaction including, receipt of required regulatory approvals, shareholder approvals, court approvals and satisfaction of other customary closing conditions; the acquisition by Co-operators, indirectly through its wholly-owned subsidiary, of all of the issued and outstanding SEB Shares; SEB and Co-operators continuing to develop products and solutions for SEB’s clients; the intention of the SEB Board of Directors to recommend that SEB Shareholders vote in favour of the Transaction; SEB Shareholders receiving the Purchase Price in exchange for their SEB Shares following closing of the Transaction; timing of the SEB Special Meeting and closing of the Transaction; disclosure of the terms and conditions of the Transaction in the SEB Circular; mailing of the SEB Circular to SEB Shareholders; SEB continuing to operate as a stand-alone entity following completion of the Transaction; directors and certain senior officers of SEB voting their SEB Shares in favour of the Transaction at the SEB Special Meeting; the Transaction being considered a “business combination” for the purposes of MI 61-101 and the Transaction being exempt from the formal valuation requirements under MI 61-101; and Co-operators filing an early warning report and copies of such early warning report being obtained upon request. Co-operators and SEB use words such as “will”, “plan”, “may”, “expect”, “intend”, “believe”, “would”, “should”, “could”, “anticipate”, “estimate”, “future”, “enable”, “potential”, “contemplate” and the negative of these terms or similar expressions to identify forward‐looking information, although not all forward‐looking information contains these identifying words. Various assumptions were used in drawing the conclusions contained in forward‐looking information throughout this news release. Forward‐looking information reflects current beliefs of management of Co-operators and SEB with respect to future events and are based on information currently available to each respective management including based on reasonable assumptions, estimates, internal and external analysis and opinions of management of Co-operators and SEB considering their experience, perception of trends, current conditions and expected developments as well as other factors that each respective management believes to be relevant as at the date such statements are made.

With respect to the forward-looking information contained in this news release, Co-operators and SEB have made assumptions regarding, among other things: that the Transaction will be completed on the terms contemplated by the Arrangement Agreement; the ability of the parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, shareholder, stock exchange and other third party approvals; the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Transaction; and other expectations and assumptions concerning the Transaction. Although Co-operators and SEB believe that the expectations reflected in the forward-looking information contained in this news release, and the assumptions on which such forward-looking information is made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this news release, as there can be no assurance that the plans, intentions, or expectations upon which the forward-looking information is based will occur.

Forward‐looking information involves significant known and unknown risks and uncertainties. Many factors could cause actual results, performance, or achievement to be materially different from any forward‐looking information. Factors that may cause such differences include, but are not limited to: the possibility that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all due to a failure to obtain or satisfy, in a timely manner or otherwise, required shareholder and regulatory approvals and other conditions of closing necessary to complete the Transaction or for other reasons; the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; risks relating to employee retention; the possibility of litigation relating to the Transaction; risks related to the diversion of management time and attention; unanticipated difficulties or expenditures relating to the Transaction; and other factors beyond the control of Co-operators and SEB which could have a material adverse effect on Co-operators or SEB or their ability to consummate the Transaction. Readers are cautioned that the forgoing lists of factors are not exhaustive.

For a more detailed discussion of risks and other factors that could affect SEB’s business, operations and financial results, see SEB’s interim management discussion and analysis for the three and nine months ended August 31, 2022, and annual management discussion and analysis for the year ended November 30, 2021, filed with the Canadian securities regulatory authorities and available on SEDAR. Forward‐looking information included in this news release is made as of the date of this news release and neither Co-operators nor SEB undertake any obligation to publicly update such forward‐looking information to reflect new information, subsequent events or otherwise unless required by applicable securities laws.

This new release does not constitute an offer to purchase or a solicitation of an offer to sell securities. Shareholders are advised to review any documents that may be filed with securities regulatory authorities and any subsequent announcements because they will contain important information regarding the Transaction and the terms and conditions thereof.

Neither TSX Venture Exchange Inc. 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.

All figures are in Canadian dollars unless otherwise stated.