September 6, 2013 – Toronto, ON
Smart Employee Benefits Inc. (“SEB”) (TSX VENTURE:SEB), is pleased to announce it has completed a private placement offering of $975,000 of units (the “Units”); with each Unit consisting of (i) a $1.00 principal amount convertible secured subordinated promissory note of SEB (the “Notes”) and (ii) one common share purchase warrant of SEB (each, a “Warrant”).
Notes: The Notes have a term maturing on May 13, 2016 (the “Maturity Date”). The Notes bear interest at an annual rate of 9.75%, with interest calculated and paid monthly in arrears. The principal amount of the Notes, to the extent not previously converted or repaid, will, on the Maturity Date, be repayable in its entirety. The Notes are convertible into the common shares of SEB at any time at $0.50 per share until May 13, 2014, thereafter at $0.60 per share until May 13, 2015 and thereafter at $0.75 per share until May 13, 2016. The Notes are pre-payable by SEB without penalty or bonus on provision of 30 days written notice; provided that during such 30 day period, note-holders shall be entitled to exercise their conversion rights prior to any repayment. The Notes will be secured by registration of a general security agreement against SEB’s assets, but subordinated to a revolving credit facility of up to $3.5 million.
Warrants: Each Warrant shall be exercisable at any time prior to May 13, 2014 at an exercise price of $0.50 for 1 common share of SEB.
Finder: SEB engaged BBS Securities Inc. as a finder. The finder received a fee consisting of 100,000 common share purchase warrants exercisable at any time until August 30, 2015 at an exercise price of $0.35 for each common share of SEB.
Subscribers: SEB received a significant portion of the subscriptions on the private placement, being $840,000 in the aggregate, from pro group subscribers or insiders of SEB, being $190,000 from Latiq Qureshi (a director of SEB), $150,000 from Adam Jasek (a director of an SEB subsidiary) and $500,000 from Ziaian Holdings Inc. (a pro group subscriber). In addition, an aggregate of $135,000 of the subscriptions was received through employees and consultants of the Company.
All securities issued in connection with the private placement are subject to a four month hold period from the date of closing as well as additional hold or escrow periods as may be applicable to insiders of SEB.
Proceeds from the private placement will be used for acquisitions and working capital requirements. The private placement is subject to regulatory approval.