<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 0-16886
SEMELE GROUP INC.
(Name of Small Business Issuer in its charter)
<TABLE>
<S> <C>
DELAWARE 36-3465422
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
ONE CANTERBURY GREEN, STAMFORD, CONNECTICUT 06901
(Address of principal executive offices) (ZIP CODE)
</TABLE>
Issuer's telephone number, including area code : (203) 363-0849
Banyan Strategic Land Fund II, 150 South Wacker Drive, Chicago, Illinois 60606
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X . NO .
Shares of common stock outstanding as of November 14, 1997: 11,923,421
Transitional Small Business Disclosure Format: YES . NO X .
1
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
SEMELE GROUP INC.
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- ---------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents...................................................... $ 6,934,413 $ 145,335
Restricted Cash................................................................ 4,419,500 --
Interest Receivable on Loans................................................... 133,515 118,821
Loans Receivable............................................................... 1,035,000 1,035,000
Foreclosed Real Estate Held for Sale, Net...................................... 9,961,991 10,611,991
Investment in Real Estate Venture.............................................. -- 4,300,865
Other Assets................................................................... 569,790 551,868
--------------- ---------------
Total Assets................................................................... $ 23,054,209 $ 16,763,880
--------------- ---------------
--------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Note Payable................................................................... $ 4,419,500 $ --
Accounts Payable and Accrued Expenses.......................................... 741,427 266,903
Accrued Real Estate Taxes...................................................... -- 32,715
--------------- ---------------
Total Liabilities.............................................................. 5,160,927 299,618
--------------- ---------------
Stockholders' Equity
Shares of Common Stock, $0.01 Par Value, 50,000,000 Authorized, 21,253,268 and
19,266,268 Shares Issued at September 30, 1997 and December 31, 1996,
respectively................................................................. 173,582,633 170,927,133
Accumulated Deficit............................................................ (139,835,144) (138,608,664)
Treasury Stock at Cost, 9,329,847 Shares....................................... (15,854,207) (15,854,207)
--------------- ---------------
Total Stockholders' Equity..................................................... 17,893,282 16,464,262
--------------- ---------------
Total Liabilities and Stockholders' Equity..................................... $ 23,054,209 $ 16,763,880
--------------- ---------------
--------------- ---------------
Book Value Per Share of Common Stock (11,923,421 and 9,936,421 Shares
Outstanding at September 30, 1997 and December 31, 1996, respectively)....... $ 1.50 $ 1.66
--------------- ---------------
--------------- ---------------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
2
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SEMELE GROUP INC.
Consolidated Statements of Income and Expenses
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
INCOME
Income From Lending and Investing Activities:
Interest on Loans Receivable...................................................... $ 29,694 $ 51,050
Income on Investments............................................................. 85,886 2,969
------------- -------------
Total Income From Lending and Investing Activities.................................. 115,580 54,019
------------- -------------
EXPENSES
Expenses From Property Operating Activities:
Net Loss From Operations of Foreclosed Real Estate Held for Sale.................. 451,418 664,491
Net (Gain) Loss From Disposition of Foreclosed Real Estate Held for Sale.......... 32,612 (31,091)
Net (Income) Loss From Operations of Real Estate Venture.......................... (412,236) 68,607
------------- -------------
Total Expenses From Property Operating Activities................................... 71,794 702,007
------------- -------------
Other Expenses:
Stockholder Expenses.............................................................. 112,778 90,666
Directors' Fees, Expenses, and Insurance.......................................... 167,545 149,552
Other Professional Fees........................................................... 289,744 113,803
General and Administrative........................................................ 704,999 500,778
Recovery of Losses on Loans, Notes and Interest Receivable........................ (4,800) (2,100)
------------- -------------
Total Other Expenses................................................................ 1,270,266 852,699
------------- -------------
Total Expenses...................................................................... 1,342,060 1,554,706
------------- -------------
Net Loss............................................................................ $ (1,226,480) $ (1,500,687)
------------- -------------
------------- -------------
Net Loss Per Share of Common Stock (Based on the Weighted Average Number of Shares
Outstanding of 11,057,293 and 9,936,421, respectively)............................ $ (0.11) $ (0.15)
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
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SEMELE GROUP INC.
Consolidated Statements of Income and Expenses
For the Three Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
INCOME
Income From Lending and Investing Activities:
Interest on Loans Receivable.......................................................... $ 5,000 $ 20,226
Income on Investments................................................................. 66,475 897
----------- -----------
Total Income From Lending and Investing Activities...................................... 71,475 21,123
----------- -----------
EXPENSES
Expenses From Property Operating Activities:
Net Loss From Operations of Foreclosed Real Estate Held for Sale...................... 118,538 124,004
Net Income From Operations of Real Estate Venture..................................... (367,203) (17,424)
----------- -----------
Total Expenses (Income) From Property Operating Activities.............................. (248,665) 106,580
----------- -----------
Other Expenses:
Stockholder Expenses.................................................................. 73,658 10,617
Directors' Fees, Expenses, and Insurance.............................................. 56,451 49,931
Other Professional Fees............................................................... 38,964 22,839
General and Administrative............................................................ 242,241 152,579
Recovery of Losses on Loans, Notes and Interest Receivable............................ (4,800) (2,100)
----------- -----------
Total Other Expenses.................................................................... 406,514 233,866
----------- -----------
Total Expenses.......................................................................... 157,849 340,446
----------- -----------
Net Loss................................................................................ $ (86,374) $ (319,323)
----------- -----------
----------- -----------
Net Loss Per Share of Common Stock (Based on the Weighted Average Number of Shares
Outstanding of 11,923,421 and 9,936,421, respectively)................................ $ (0.01) $ (0.03)
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
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SEMELE GROUP INC.
Consolidated Statements of Stockholders' Equity
For the Nine Months Ended September 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------- ACCUMULATED TREASURY
SHARES AMOUNT DEFICIT STOCK TOTAL
------------ -------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Stockholders' Equity, December 31,
1996............................ 19,266,268 $ 170,927,133 $ (138,608,664) $ (15,854,207) $ 16,464,262
Issuance of Stock, Net............ 1,987,000 2,655,500 -- -- 2,655,500
Net Loss.......................... -- -- (1,226,480) -- (1,226,480)
------------ -------------- --------------- -------------- -------------
Stockholder's Equity, September
30, 1997........................ 21,253,268 $ 173,582,633 $ (139,835,144) $ (15,854,207) $ 17,893,282
------------ -------------- --------------- -------------- -------------
------------ -------------- --------------- -------------- -------------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
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SEMELE GROUP INC.
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss............................................................................ $ (1,226,480) $ (1,500,687)
Adjustments to Reconcile Net Loss to Net Cash Used
In Operating Activities:
Recovery of Losses on Loans, Notes and Interest Receivable........................ (4,800) (2,100)
Net (Gain) Loss From Disposition of Foreclosed Real Estate Held For Sale.......... 32,612 (31,091)
Net (Income) Loss From Operations of Real Estate Venture.......................... (412,236) 68,607
Net Change In:
Interest Receivable on Investments................................................ -- 3,754
Interest Receivable on Loans...................................................... (14,694) (41,877)
Other Assets...................................................................... (17,922) 250,207
Accounts Payable and Accrued Expenses............................................. 474,524 (145,827)
Accrued Real Estate Taxes......................................................... (32,715) 43,577
------------- -------------
Net Cash Used in Operating Activities............................................... (1,201,711) (1,355,437)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Investment Securities....................................... -- 310,007
Principal Payments on Investment Securities....................................... -- 316,939
Proceeds from the Sale of Foreclosed Real Estate Held for Sale.................... 617,388 271,757
Distributions from Investment in Real Estate Venture.............................. 4,713,101 --
Investment in Real Estate Venture................................................. -- (110,525)
Recovery of Losses on Loans, Notes and Interest Receivable........................ 4,800 2,100
Collection of Loans Receivable.................................................... -- 88,000
------------- -------------
Net Cash Provided By Investing Activities........................................... 5,335,289 878,278
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Stock, Net.............................................................. 2,655,500 --
------------- -------------
Net Cash Provided By Financing Activities........................................... 2,655,500 --
------------- -------------
Net Increase (Decrease) in Cash and Cash Equivalents................................ 6,789,078 (477,159)
Cash and Cash Equivalents at Beginning of Period.................................... 145,335 549,309
------------- -------------
Cash and Cash Equivalents at End of Period.......................................... $ 6,934,413 $ 72,150
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
6
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
Readers of this quarterly report should refer to the audited consolidated
financial statements of Semele Group Inc. (the "Fund"), formerly known as Banyan
Strategic Land Fund II, for the year ended December 31, 1996 which are
included in the Fund's 1996 Annual Report on Form 10-KSB for the year ended
December 31, 1996, as certain footnote disclosures which would substantially
duplicate those contained in such audited statements have been omitted from
this report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1997 and December 31, 1996 and results of
operations for the three and nine month periods ended September 30, 1997 and
1996 have been made and are reflected.
1. Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Fund and its wholly-owned subsidiaries and consolidated ventures which hold
title to the Fund's properties. In April 1996, the Fund acquired 100% of the
outstanding shares of BMC Banden Corp. The assets and liabilities of this
wholly-owned subsidiary have not been consolidated as they have been accorded no
value. All intercompany balances and transactions have been eliminated in
consolidation. The Fund's 47% interest in the H Street Assemblage was accounted
for on the equity method as an investment in real estate joint venture.
Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Fund will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The Fund has not yet determined what the
impact of Statement 128 will be on the calculation of fully diluted earnings per
share.
2. Foreclosed Real Estate Held for Sale
Lindfield Tract D
The Lindfield Tract D property is an 8.5-acre parcel of land zoned for
commercial use within a multi-use planned unit development, located in
Kissimmee, Florida. On June 23, 1997, the Fund sold the Lindfield Tract D
property to an unaffiliated third party for a purchase price of $675,000. The
Fund's carrying value for this property at the time of sale was $650,000. Cash
proceeds received, net of transaction costs, were $617,388, resulting in a net
loss on disposition of $32,612 for financial reporting purposes.
7
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
Rancho Malibu
Rancho Malibu is a 274-acre parcel of undeveloped land north of Malibu,
California. On July 1, 1992, a joint venture (the "Venture") between the Fund
and Legend Properties, Inc. (f/k/a Banyan Mortgage Investment Fund)
("Legend") acquired title to the property pursuant to a deed in lieu of
foreclosure agreement. The Fund owns a 98.6% general partner interest in the
Venture while Legend holds the remaining 1.4% interest as a limited partner.
The Venture's results are consolidated in the accompanying financial
statements.
From the acquisition date, the Venture has engaged in zoning and entitlement
activities which have been opposed by the City of Malibu and various citizen
groups. The City initiated two separate legal actions intended to preclude the
issuance of a Coastal Development Permit, both of which were ultimately resolved
in favor of the Venture.
Concurrent with the aforementioned litigation, the Venture pursued
entitlements before the Board of Supervisors for the County of Los Angeles. In
September 1995, the Los Angeles County Regional Planning Commission, by a 3 to 2
vote, approved a revised plan to develop a fifty-one unit housing community on
the Rancho Malibu property. The Los Angeles County Regional Planning
Commission's approval was appealed to the Los Angeles County Board of
Supervisors. On May 14, 1996, the Los Angeles County Board of Supervisors
approved a compromise project (the "Project") to create forty-six single family
lots. These approvals are specified in Los Angeles County CUP No. 91-315(3), Oak
Tree Permit No. 91-315(3) and Tentative Tract No. 46277 (revised), approved May
14, 1996. On June 17, 1996, a neighboring homeowners association filed an action
entitled La Chusa Highlands Property Owners Association, Inc. v. Los Angeles
County, et al., Los Angeles County Superior Court Case No. BS039789 (the "La
Chusa Litigation"), challenging the aforesaid approvals. The Fund, Legend and
the Venture are named as real parties in interest.
The La Chusa Litigation was tried before a Court on January 27, 1997. On
February 5, 1997, the Court issued its ruling, granting the Petitioner's Writ
and remanding the matter to the County Board of Supervisors for further action
on three separate grounds: (i) the Supervisors' analyses and findings relating
to the consistency of the Projects' cul de sacs and streets within certain
County of Los Angeles Code provisions restricting the length of cul de sacs to
1,000 feet were deemed inadequate; (2) a proposed deed restriction requiring the
Venture to "diligently seek" approval for a second living unit on five of the
forty-six lots was held to be too abstract to comply with the low income housing
requirement of state law and (3) the Court found that the County acted
improperly when it approved the Project in January of 1996 and later approved a
Supplemental Environmental Impact Report ("SEIR") in May of 1996.
The Court's order specifically rejected challenges to the Project's
entitlements predicated on: (i) the adequacy of the Supervisors' analyses of
the environmental impacts of the Project under the SEIR; (ii) the consistency
of the Project with the County General Plan; (iii) the approval of a
8
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
sewage treatment plant and (iv) the density of the Project under the Hillside
Management Ordinance.
The Court entered a final judgment in the La Chusa Litigation on March 25,
1997. The Venture filed a notice of appeal of this judgment on April 25, 1997
and also intends to seek further action by the Supervisors to address the three
issues specified by the Court in order to reinstate the entitlements set aside
by the Court. The Venture appeared before the Supervisors at a publc hearing on
November 6, 1997. The matter was heard and continued with no action taken. The
Venture expects to be heard again at the Supervisors' meeting in December 1997,
but has yet to receive confirmation of the exact date or its place on the
Agenda.
On April 29, 1997, counsel for La Chusa Highlands Property Owners
Association, Inc. presented a petition for an award of attorney's fees in
connection with the Court's judgment of March 25, 1997. The
Court heard argument on the petition and on April 30, 1997 awarded the
petitioner's counsel the sum of $126,711 in attorney's fees and related costs.
An appeal of this order has been incorporated into the Fund's appeal of the
March 25, 1997 judgment discussed above. The Fund's initial brief was filed on
October 9, 1997. The petitioner's response is due in early January 1998.
In an earlier action, the Venture challenged the General Plan and the
Environmental Impact Report adopted by the City of Malibu on Nov. 20, 1995 in a
lawsuit entitled BMIF/BSLFII Rancho Malibu Limited Partnership v. City of
Malibu, Los Angeles County Superior Court Case No. SS006374. On July 31, 1996,
the Venture and the City of Malibu executed and delivered a settlement agreement
which, among other things, resulted in a dismissal of the lawsuit challenging
the City's General Plan and which precludes the City from challenging the
Venture's entitlements before any public body (in the absence of a significant
requested change). The City is also precluded by the settlement agreement from
participating in the La Chusa Litigation.
During the nine months ended September 30, 1997, the Venture incurred
approximately $448,000 in costs in connection with Rancho Malibu relating to
entitlement activities, holding costs and litigation. These costs, treated as
capital contributions to the Venture by the Fund, were included in total
expenses from property operating activities on the Fund's consolidated
statements of income and expenses. As of September 30, 1997 and December 31,
1996, the Fund's carrying value of the property was $9,961,991.
3. Transaction with Affiliates
Administrative costs, primarily salaries and general and administrative
expenses, were incurred on the Fund's behalf by Banyan Management Corp. ("BMC")
and were reimbursed at cost by the Fund. These costs were allocated to the Fund
and other entities to which BMC provides administrative services based upon the
actual number of hours spent by BMC personnel on matters related to that
particular entity in relation to total BMC personnel hours. The Fund's allocable
share of costs for the nine months ended September 30, 1997 and 1996 aggregated
$107,781 and
9
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SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
$246,546, respectively. As one of its administrative services, BMC served as
the paying agent for general and administrative costs of the Fund. As part of
providing this payment service, BMC maintained a bank account on behalf of
the Fund. At September 30, 1997, the Fund had a net receivable due from BMC
of $28,208. The net receivable is included in other assets in the Fund's
Consolidated Balance Sheet. Effective May 6, 1997, Equis Financial Group
Limited Partnership ("EFG") entered into an Administrative Services Agreement
to provide administrative services to the Fund, replacing BMC. In connection
with the transition from BMC to EFG, certain services were provided by BMC
subsequent to the effective date pursuant to an Amended Administrative
Services Agreement with BMC. During the nine months ended September 30, 1997,
the Fund incurred $29,700 in administrative costs for services provided by
EFG personnel for Fund related matters. This amount is included in accounts
payable and accrued expenses on the Consolidated Balance Sheet at September
30, 1997. See Note 7--Exchange Agreement for further discussion.
4. Recovery of Losses on Loans, Notes and Interest Receivable
In July 1997, the Fund received a cash distribution of $4,800 related to
its interest in a liquidating trust established for the benefit of the
unsecured creditors (including the Fund) of VMS Realty Partners and its
affiliates. The Fund has treated the $4,800 as a recovery of amounts
previously charged to losses on loans, notes and interest receivable on its
consolidated statement of income and expense for the three and nine months
ended September 30, 1997. During 1996, the Fund received a cash distribution
of $2,100 related to its interest in the aforementioned liquidating trust and
has treated it as a recovery of losses on loans, notes and interest
receivable on its consolidated statement of income and expenses for the three
and nine months ended September 30, 1996.
5. Disposition of Investment in Real Estate Venture
On October 22, 1990, the Fund acquired title to the property known as the H
Street Assemblage located in Washington, D.C. pursuant to an agreement with
Banyan Strategic Realty Trust ("BSRT"). On June 5, 1992, the Fund and BSRT
formed a joint venture (the "Venture") to pursue its development rights. The
Fund had a 47% interest in the Venture while BSRT owned the remaining 53%. This
property consisted of 36,100 square feet of undeveloped land in downtown
Washington, D.C. plus an approximately 55,900 square foot office building. The
entire property was zoned for office development.
On March 20, 1997, the Venture sold approximately 3,500 square feet of the
Venture's land to the United States General Services Administration on behalf of
the United States of America ("GSA") for a purchase price of $1,680,000. GSA
also paid the Venture $150,000 as a reimbursement of expenses that the Venture
incurred in anticipation of this transaction. Ultimately, the Venture received
net sales proceeds of $1,828,900. On July 29, 1997, the Venture sold the
remaining land and office building to an unaffiliated third party for $9,000,000
and received additional net sale proceeds of $8,469,821. The Fund's share of the
gain on disposition recognized
10
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
by the Venture was $371,979 and is included in net income from operations of
real estate venture for the three and nine months ended September 30, 1997 on
the accompanying Consolidated Statements of Income and Expenses. During the
nine months ended September 30, 1997, the Fund received aggregate
distributions from the Venture of $4,713,101, including its allocation of
such sales proceeds. At September 30, 1997, the Venture had no further
ownership interest in the H Street Assemblage property.
6. Litigation
On June 16, 1994, Coastal Group, Inc. brought an action against Westholme
Partners, (an entity in which the Fund has a limited partnership interest), Bank
of America (f/k/a Continental Bank, N.A.) ("CINB"), BMC Westholme Corp., (a
wholly owned subsidiary of the Fund); the Anden Group ("Anden"), William A.
Brandt, Jr. and Kent Kneblekamp in the New Jersey Superior Court, Middlesex
County. The case was subsequently removed to the United States District Court
for the District of New Jersey and assigned case # 94-3010. The case involves a
real estate development project located in New Jersey known as "Winding River."
BMC Westholme Corp. was served with Summons and Complaint in June of
1994, but was not actively involved in the various motions and other
procedural matters which extended for approximately thirty months. On
February 10, 1997, BMC Westholme Corp. filed its Answer and began to take a
more active role in the case.
The plaintiff's complaint has been substantially reduced by favorable
rulings, entered October 3, 1996, on various motions to dismiss whereby ten
of plaintiff's sixteen counts were dismissed and another count was limited in
scope. The complaint now alleges breach of contract, unjust enrichment,
breach of the implied covenant of good faith and fair dealing and fraudulent
transfer and also seeks relief under a theory of promissory estoppel and
requests the creation of a constructive trust for the benefit of plaintiff.
The case arises from a failed development and a subsequent foreclosure
filed by defendant CINB. The plaintiff contends, among other things, that
CINB and BMC Westholme Corp. conspired with Anden to deprive the plaintiff of
its interest in the Winding River project, damaging plaintiff's reputation as
a homebuilder and causing it to lose business opportunities. The amount in
controversy exceeds $6,000,000, although the Fund believes that if there is
any liability to the plaintiffs in this matter, it rests with defendants
other than BMC Westholme Corp. The case remains in the discovery phase. A
significant amount of discovery, including depositions and document
production, was concluded during the second and third quarters of 1997. A
pre-trial order has been submitted by all parties. Factual discovery is now
completed; expert depositions are underway and are anticipated to be
concluded in December 1997. A motion for summary judgment was filed by CINB
and is expected to be heard in January 1998. The Fund intends to join in that
motion. The case is expected to be tried during the first quarter of 1998
unless it is resolved by the pending motion.
11
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
The ultimate outcome of this matter cannot be determined at this time.
However, in the opinion of management of the Fund, the eventual outcome of
this matter will not have a material adverse effect on the financial position
of the Fund. The financial statements do not include any adjustments for
liability, if any, arising from this matter.
7. Exchange Agreement
The Fund executed and delivered an Exchange Agreement dated as of April
30, 1997 (as amended as of August 7, 1997, the "Agreement") among the Fund,
Equis Exchange L.L.C., a Massachusetts limited liability company ("Equis"),
EFG and certain partnerships affiliated with EFG ("the Partnerships").
Pursuant to the Agreement, on April 30, 1997, the Fund issued to the
Partnerships 1,987,000 shares of the Fund's common stock at the price of
$1.50 per share. Cash proceeds received by the Fund, $2,655,500, were net of
related costs of $325,000. The 1,987,000 shares are included in the total
shares outstanding of the Fund when calculating Net Loss Per Share of Common
Stock Based on the Weighted Average Number of Shares Outstanding. In
addition, the Partnerships made a three-year loan (the "Loan") to the Fund in
the amount of $4,419,500. These transactions are expected to provide capital
to assist the Fund in a new growth-oriented business plan, which includes the
development of the Fund's Rancho Malibu property.
The Loan was initially disbursed into a segregated account, the proceeds
of which were not available to the Fund until stockholder consent ("the
Consent") was received related to certain stockholder proposals (see below).
The interest rate on the Loan is equal to the interest rate earned on the
proceeds of the Loan while such proceeds remain in the segregated account. If
the stockholder consent is obtained, the Loan will be disbursed to the Fund,
the interest rate will change to 10% per annum, the term will be fixed at
three years and mandatory principal reductions will be required, if and to
the extent net proceeds are received from the sale or refinancing of the
Rancho Malibu property (see Note 10--Subsequent Events).
The Agreement provided that the Fund would solicit its stockholders for
proxies in connection with proposed changes in the Fund's Certificate of
Incorporation and By-laws. Among the changes requested will be: (i) the
election of a new Board of Directors nominated by EFG for terms of up to 3
years and an increase in the size of the Board to as many as nine members,
provided a majority of the Board shall consist of members independent of the
Fund, EFG or any affiliate; (ii) an amendment extending the Fund's life to
perpetual and changing its name; (iii) an amendment designed to restrict or
deter, to the extent legally permissible, the acquisition of more than 4.9%
of the common stock of the Fund by any person in such a manner as would cause
such person to become a 5% stockholder within the meaning of Section 382 (g)
of the Internal Revenue Code; and (iv) any other amendment reasonably
requested by EFG. If the aforesaid consent of the stockholders is obtained by
December 31, 1997, the Fund intends to declare a one-time cash distribution
to its stockholders of $0.20 per share (see Note 10--Subsequent Events).
Pursuant to the Agreement, the Administrative Services Agreement between the
Fund and BMC was amended to provide, among other things, for the immediate
payment to BMC of the
12
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
termination fee required thereby in the amount of $251,823 and the transfer
to BMC's designee of the Fund's ownership interest in BMC. Pursuant to the
Agreement, the Fund also entered into a new Administrative Services Agreement
with EFG (see Note 3--Transactions with Affiliates).
As a result of the Agreement, Mr. Gary D. Engle, a principal of EFG, was
added to the Fund's Board of Directors and Mr. James A. Coyne, also a
principal of EFG, was named Chief Operating Officer of the Fund. The Consent
of the stockholders was obtained and all proposals were adopted on October
21, 1997 (see Note 10--Subsequent Events).
8. Stock Options
On May 8, 1997, the Fund retired 68,500 options to purchase shares of the
Fund's common stock at a price of $0.20 per share or $13,700. The options
were originally granted from 1994 to 1996 to certain members of management
pursuant to the 1994 Executive and Directors Stock Option Plan at a weighted
average price of $1.30 per share.
9. NASDAQ Proposed Change
The Fund currently satisfies the conditions for continued inclusion on
the NASDAQ National Market System as of the date hereof. The Board of
Directors of NASDAQ, however, has proposed new rules regarding criteria for
continued listing that the Fund has not consistently met, based on the Fund's
stock price. If these rules are adopted, the Fund could be delisted from the
NASDAQ National Market System. In such an event, the Fund would consider
various changes in its capital structure to permit it to be listed again.
There is no assurance that the Fund would be able to maintain its listing or
be re-listed on the NASDAQ National Market System.
10. Subsequent Events
On October 21, 1997, the Fund conducted its annual meeting of
stockholders for the year ended December 31, 1996 ("Annual Meeting"). At the
Annual Meeting, the stockholders approved an Amended and Restated Certificate
of Incorporation ("Restated Certificate") and Amended and Restated By-laws
("Restated By-laws"). The Restated Certificate was filed on October 24, 1997
with the Delaware Secretary of State. The Restated Certificate, among other
things, caused the name of the Fund to be changed to Semele Group Inc.
("Semele") and changed the Fund's life from finite to perpetual. The Restated
By-laws, among other things, prohibit any person from acquiring more than
4.9% of the outstanding shares of Common Stock of the Fund. In addition, at
the Annual Meeting, the stockholders of the Fund re-elected four directors
and elected two new directors.
On October 21, 1997, the Fund's Board of Directors declared a
distribution of $0.20 per share to stockholders of record as of September 4,
1997 which will be paid on November 14, 1997. In addition, the loan proceeds
which were not immediately available to the Fund (see Note 7--Exchange
Agreement), were disbursed to the Fund.
13
<PAGE>
SEMELE GROUP INC.
Notes to Consolidated Financial Statements
(Continued)
On November 10, 1997, Leonard Levine, the President of Semele, notified
the Fund that he intended to resign, pursuant to his employment agreement.
Mr. Levine advised the Fund that he anticipates entering into an employment
agreement with Banyan Strategic Realty Trust ("BSRT") under which he would be
required to devote substantially all of his time to BSRT. Gary D. Engle, a
director of the Fund, was named Chairman and Chief Executive Officer. James
A. Coyne, currently Semele's Chief Operating Officer and a director was named
President. Gary Romano, Executive Vice President of EFG will replace Joel
Teglia as Chief Financial Officer. In addition, Craig Mills, an attorney with
the law firm of Peabody & Brown, will replace Robert Higgins as Secretary.
These changes will take effect concurrently with Mr. Levine's resignation,
which will be effective not later than December 10, 1997. As a result of
these changes and in order to consolidate costs, Semele will move its
corporate office from Chicago to EFG's Stamford, Connecticut office.
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
or Plan of Operation
General
The Fund was originally established to invest primarily in short-term,
junior, predevelopment and construction mortgage loans. The borrowers
subsequently defaulted on these mortgage loan obligations, adversely
affecting the Fund. As a result of these defaults, the Fund suspended the
making of new loans, except for advances of additional funds under
circumstances in which it is deemed necessary to preserve the value of
existing collateral, including instances where the Fund has foreclosed upon
or taken title, directly or indirectly, to the collateral. The Fund also
suspended distributions to stockholders. In 1990, the Fund implemented a plan
designed to preserve its assets and manage its properties acquired through
foreclosure or otherwise until they would be disposed of in an orderly
manner. On February 25, 1997, the Directors of the Fund authorized management
to engage an investment banking firm for purposes of evaluating strategic
alternatives for maximizing stockholder value. The Fund executed and
delivered an Exchange Agreement dated as of April 30, 1997 (as amended as of
August 7, 1997, the "Agreement") among the Fund, Equis Exchange L.L.C., a
Massachusetts limited liability company ("Equis"), Equis Financial Group
Limited Partnership ("EFG") and certain partnerships affiliated with EFG
("the Partnerships"). Pursuant to the Agreement, the Fund issued to the
Partnerships 1,987,000 shares of the Fund's common stock at the price of
$1.50 per share. Cash proceeds received by the Fund, $2,655,500, were net of
related costs of $325,000. In addition, the Partnerships made a three-year
loan to the Fund in the amount of $4,419,500. These transactions are expected
to provide capital to assist the Fund in a new growth-oriented business plan,
which includes the development of the Fund's Rancho Malibu property.
The Loan was initially disbursed into a segregated account, the proceeds of
which were not available to the Fund until the stockholder consent ("the
Consent") was received related to certain stockholder proposals. The Fund
solicited its stockholders for proxies in connection with proposed changes in
the Fund's Certificate of Incorporation and By-laws. Among the changes requested
were: (i) the election of a new Board of Directors nominated by EFG for terms of
up to 3 years and an increase in size of the Board to as many as nine members,
provided a majority of the Board shall consist of members independent of the
Fund, EFG or any affiliate; (ii) an amendment extending the Fund's life to
perpetual and changing its name; (iii) an amendment designed to restrict or
deter, to the extent legally permissible, the acquisition of more than 4.9% of
the common stock of the Fund by any person in such a manner as would cause such
person to become a 5% stockholder within the meaning of Section 382 (g) of the
Internal Revenue Code; and (iv) any other amendment reasonably requested by EFG.
The Consent of the stockholders was obtained and proposals including the changes
described in (i) through (iii) above were adopted on October 21, 1997. See Note
10 to the financial statements for additional discussion.
Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Discussions containing forward-looking
statements may be found in this section. Without limiting the foregoing, words
such as "anticipates", "expects", "intends", "plans" and similar expressions are
15
<PAGE>
intended to identify forward-looking statements. These statements are subject
to a number of risks and uncertainties including the Fund's ability to
successfully implement a new growth-oriented business plan and favorably
resolve the litigations (see Notes 2, 6 and 7 to the financial statements).
Actual results could differ materially from those projected in the
forward-looking statements. The Fund undertakes no obligation to update these
forward-looking statements to reflect future events or circumstances.
The Fund currently holds an ownership interest in a 274-acre land parcel
located in Southern California known as the Rancho Malibu property. In addition,
the Fund's current loan portfolio consists of the Northholme Partners, Hemet IV
and Lindfield Tract A loans.
Liquidity and Capital Resources
Cash and cash equivalents consist of cash and short-term investments. The
Fund's cash and cash equivalents balance at September 30, 1997 and December
31, 1996 was $6,934,413 and $145,335, respectively. This increase in total
cash and cash equivalents of $6,789,078 is the result of cash generated
through investing and financing activities of $5,335,289 and $2,655,500,
respectively, offset by $1,201,711 cash used for operating activities.
Cash Flow From Operating Activities: Net cash used in operating
activities decreased by $153,726 for the nine months ended September 30, 1997
to $1,201,711 from $1,355,437 for the same period in 1996.
Cash Flow From Investing Activities: For the nine months ended September
30, 1997, net cash provided by investing activities was $5,335,289 compared
to $878,278 for the same period in 1996. This increase of $4,457,011 is due
primarily to distributions from the investment in real estate venture of
$4,713,101 (see below) and proceeds received from the sale of foreclosed real
estate of $617,388 (see below) during the nine months ended September 30,
1997 compared to $271,757 of proceeds received from the disposition of
Westholme assets during the same period in 1996. In addition, in 1996 the
Fund received proceeds from sale of investment securities of $310,007,
principal payments on investment securities of $316,939, and a principal
payment of $88,000 relating to the Hemet Phase III promissory note.
Cash Flow From Financing Activities: During the nine months ended
September 30, 1997, net cash provided by financing activities was $2,655,500
resulting from the issuance of stock pursuant to the Exchange Agreement
described above.
The Fund's future liquidity needs are dependent upon, among other things:
(i) the level of liquidity required to successfully implement a new
growth-oriented business plan (ii) the Fund's ability to favorably resolve
the La Chusa Litigation which impacts the Rancho Malibu property; and (iii)
the Fund's ability to control its property level and Fund level operating
expenses.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. At that time, the Fund will be required to change the method currently
used to compute earnings per share and to restate all prior periods. Under the
new requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The Fund has not yet determined what the
impact of Statement 128 will be on the calculation of fully diluted earnings per
share.
16
<PAGE>
As of September 30, 1997 and December 31, 1996, the Fund's mortgage loan
portfolio consisted of three loans with a carrying value totaling $1,035,000.
During the nine months ended September 30, 1997, the Fund received interest
payments of $15,000 on the Lindfield Tract A purchase money mortgage note.
For the nine months ended September 30, 1997 and 1996, the Fund recognized
interest income on these loans totaling $29,694 and $51,050, respectively.
Results of Operations
Nine months ended September 30, 1997 compared to the nine months ended
September 30, 1996:
Total income from lending and investing activities for the nine months
ended September 30, 1997 increased to $115,580 from $54,019 for the nine
months ended September 30, 1996. This increase is due primarily to an
increase in income earned on investments. The increase in income on
investments reflects an increase in cash available for investment resulting
primarily from the issuance of stock and the sale of the Fund's investment in
the real estate venture.
Total expenses for the nine months ended September 30, 1997 decreased to
$1,342,060 from $1,554,706 for the nine months ended September 30, 1996. This
decrease of $212,646 for the nine months ended September 30, 1997 when
compared to the same period in 1996 is due to a decrease of $630,213 in total
expenses from property operating activities offset by an increase of $417,567
in total other expenses. The decrease in total property operating expenses is
due primarily to the recognition of net income from operations of the real
estate venture of $412,236, relating to the Fund's interest in the H Street
property, for the nine months ended September 30, 1997 as compared to a net
loss of $68,607 for the same period in 1996. See discussion below for further
details regarding the operating results and sale of the H Street property.
Further contributing to the decrease in total property operating expenses is
a decrease in net loss from operations of foreclosed real estate held for
sale of $213,073. The decrease in the net loss from operations of foreclosed
real estate held for sale is due to a reduction in legal and entitlement
costs relating to the Rancho Malibu property subsequent to the approval of
the project by the Los Angeles County Board of Supervisors (see Note 2 to the
financial statements). Partially offsetting the decrease in total property
operating expenses was the recognition of a net loss of $32,612 from
disposition of the foreclosed real estate held for sale during the nine
months ended September 30, 1997, compared to a net gain of $31,091 during the
same period in 1996 (see discussion below). The increase in total other
expenses is due primarily to increases in general and administrative expenses
and other professional fees. The increase in general and administrative
expenses reflects a termination fee of $251,823 paid to Banyan Management
Corp. ("BMC") in connection with the Exchange Agreement (see Note 7 to the
financial statements) and incentive compensation accrued in connection with
the H-Street sale offset by a reduction in recurring expenses of BMC
resulting from a reduction in time spent by BMC personnel on Fund related
matters. Other professional fees increased due primarily to legal costs
related to the Westholme litigation (see Note 6 to the financial statements)
and costs incurred to engage an investment banking firm for purposes of
evaluating strategic alternatives for maximizing stockholder value.
17
<PAGE>
During the nine months ended September 30, 1997, the Fund recorded net
income of $412,236 from the operations of a real estate venture as compared
to a net loss of $68,607 for the same period in 1996. This net income (loss)
reflects the Fund's 47% interest in the H Street Venture (the "Venture"). The
Venture owned an office building with approximately 55,900 square feet of
gross leasable area (the "Victor Building") and an adjacent land parcel
consisting of 36,100 square feet (the "H Street Assemblage") located in
Washington, D.C. On March 20, 1997, the Venture sold approximately 3,500
square feet of the Venture's land to the United States General Services
Administration on behalf of the United States of America ("GSA") for a
purchase price of $1,680,000. GSA also paid the Venture $150,000 as a
reimbursement of expenses that the Venture incurred in anticipation of this
transaction. Ultimately, the Venture received net sales proceeds of
$1,828,900. On July 29, 1997, the Venture sold the remaining land and office
building to an unaffiliated third party for $9,000,000 and received
additional net sale proceeds of $8,469,821. The Fund's share of the gain on
disposition recognized by the Venture was $371,979 and is included in net
income from operations of real estate venture for the three and nine months
ended September 30, 1997 on the accompanying Consolidated Statements of
Income and Expenses. During the nine months ended September 30, 1997, the
Fund received aggregate distributions from the Venture of $4,713,101,
including its allocation of such sales proceeds. At September 30, 1997, the
Venture had no further ownership interest in the H Street Assemblage property.
On June 23, 1997, the Fund sold the Lindfield Tract D property, having a
carrying value of $650,000, to an unaffiliated third party for a purchase price
of $675,000. Cash proceeds received, net of transaction costs, were $617,388
resulting in a loss on disposition of $32,612 for financial reporting purposes.
During the nine months ended September 30, 1996, the Fund recognized a net gain
from the disposition of its interest in the Hemet Phase III property of $31,091.
The above discussed changes resulted in a decrease in the net loss for
the nine months ended September 30, 1997 to $1,226,480 ($0.11 per share) from
$1,500,687 ($0.15 per share) for the nine months ended September 30, 1996. On
April 30, 1997, the Fund issued 1,987,000 shares of stock. As a result, the
net loss per share for the nine months ended September 30, 1997 is based on
the weighted average number of shares outstanding during the period of
11,057,293 as compared to 9,936,421 for the same period in 1996.
Three months ended September 30, 1997 compared to the three months ended
September 30, 1996:
Total income from lending and investing activities for the three months
ended September 30, 1997 increased to $71,475 from $21,123 for the three months
ended September 30, 1996. This increase is due primarily to an increase in
income earned on investments. The increase in income on investments reflects an
increase in cash available for investment resulting primarily from the issuance
of stock and the sale of the Fund's investment in the real estate venture.
Total expenses for the three months ended September 30, 1997 decreased to
$157,849 from $340,446 for the three months ended September 30, 1996. This
decrease of $182,597 for the three months ended September 30, 1997 when compared
to the same period in 1996 is due to a decrease of $355,245 in total expenses
from property operating activities offset by an increase of $172,648 in total
other expenses. The decrease in total property operating expenses is due
primarily to the
18
<PAGE>
recognition of net income from operations of the real estate venture of
$367,203, relating to the Fund's interest in the H Street property, for the
three months ended September 30, 1997 as compared to $17,424 for the same
period in 1996. See discussion above for further details regarding the
operating results and sale of the H Street property. The increase in total
other expenses is due primarily to increases in general and administrative
expenses and stockholder expenses. General and administrative expenses
increased during the three months ended September 30, 1997 as compared to the
same period in 1996 due to incentive compensation accrued in connection with
the H-Street sale and executive compensation. Stockholder expenses increased
during the three months ended September 30, 1997 as compared to the same
period in 1996 due to costs incurred in connection with obtaining the
stockholder consent to, among other things, change the Fund's Certificate of
Incorporation and By-laws as discussed above.
The above discussed changes resulted in a decrease in the net loss for
the three months ended September 30, 1997 to $86,374 ($0.01 per share) from
$319,323 ($0.03 per share) for the three months ended September 30, 1996.
On a quarterly basis, management reviews the mortgage loans in the Fund's
portfolio and records appropriate loss provisions. The provisions are based
upon a number of factors, including management's analyses of the value of the
collateral and, in certain cases, ongoing negotiations regarding disposition
of this collateral, as well as consideration of the general business
conditions affecting the Fund's portfolio. Management also reviews the
investment properties held by the Fund on a quarterly basis and, when it has
been determined that a permanent impairment in the value of a given property
has occurred, the carrying value of the property is then written down to its
fair market value. Management has determined that no reductions are necessary
for the three and nine months ended September 30, 1997.
Litigation
In connection with the Fund's interest in a joint venture which owns a
274-acre land parcel known as the Rancho Malibu property ("the Venture"), the
Venture has been engaged in zoning and entitlement activities which have been
opposed by the City of Malibu and various citizen groups. During the nine
months ended September 30, 1997, the Venture incurred approximately $448,000
in costs in connection with Rancho Malibu relating to entitlement activities,
holding costs and litigation. These costs, treated as capital contributions
to the Venture by the Fund, were included in total expenses from property
operating activities on the Fund's consolidated statements of income and
expenses. See Note 2 to the financial statements.
The Fund continues to be engaged in litigation involving a real estate
development project known as "Winding River". The ultimate outcome of this
matter cannot be determined at this time. However, in the opinion of management
of the Fund, the eventual outcome of this matter will not have a material
adverse effect on the financial position of the Fund. The financial statements
do not include any adjustments for liability, if any, arising from this matter.
See Note 6 to the financial statements.
19
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
See Notes 2 and 6 to the Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
The Registrant's annual meeting of stockholders was held on October 21,
1997. At the Meeting the following nominees for Director were elected and the
following proposals were approved:
1. Election of Directors:
<TABLE>
<CAPTION>
NUMBER OF SHARES
---------------------
<S> <C> <C>
FOR WITHHELD
---------- ---------
Walter E. Auch.................................... 8,212,406 357,875
Gerald L. Nudo.................................... 8,242,496 327,785
Robert M. Ungerleider............................. 8,234,362 335,919
Gary D. Engle..................................... 8,235,672 334,609
Joseph W. Bartlett................................ 8,236,297 333,984
James A. Coyne.................................... 8,237,920 332,361
</TABLE>
2. Approval of Independent Auditors:
<TABLE>
<CAPTION>
NUMBER OF SHARES
-----------------
<S> <C>
For.................................................... 8,287,127
Against................................................ 102,851
Abstain................................................ 180,303
Non-Vote............................................... 0
</TABLE>
3. Approval of the Restated Certificate of Incorporation:
<TABLE>
<CAPTION>
NUMBER OF SHARES
-----------------
<S> <C>
For.................................................... 6,402,408
Against................................................ 228,140
Abstain................................................ 276,321
Non-Vot................................................ 1,663,412
</TABLE>
20
<PAGE>
4. Approval of the Amended and Restated By-laws:
<TABLE>
<CAPTION>
NUMBER OF SHARES
-----------------
<S> <C>
For.................................................... 6,403,098
Against................................................ 227,148
Abstain................................................ 283,350
Non-Vote............................................... 1,656,685
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
The following exhibit is filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
(4) Form of new stock certificate
</TABLE>
The following exhibits are incorporated by reference from the Fund's
Quarterly Report on Form 10-QSB for the period ended June 30, 1997:
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -------------
<S> <C>
(10) Material Contracts
(i) Third Amended and Restated Employment Agreement for
Leonard G. Levine dated May 1, 1997
(ii) Amendment No. 1 to Exchange Agreement dated August 7, 1997
</TABLE>
The following exhibits are incorporated by reference from the Fund's
Quarterly Report on Form 10-QSB for the period ended March 31, 1997:
<TABLE>
<CAPTION>
Exhibit
Number DESCRIPTION
- --------- -----------
<S> <C>
(10) Material Contracts
(i) Exchange Agreement dated as of April 30, 1997 by and among AFG
Hato Arrow Limited Partnership, AFG Dove Arrow Limited
Partnership, AIP/Larkfield Limited Partnership, Equis Exchange
LLC, Equis Financial Group Limited Partnership and the
Registrant and related exhibits.
</TABLE>
21
<PAGE>
The following exhibits are incorporated by reference from the Fund's Annual
Report on Form 10-KSB for the year ended December 31, 1996:
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- -----------
<S> <C>
(10) Material Contracts
(i) Directors Stock Option Agreement dated July 15, 1994
(ii) Executive Stock Option Agreements dated July 1, 1994, July 11,
1995 and April 16, 1996
(21) Subsidiaries of the Fund
</TABLE>
(b) Reports on Form 8-K
A current report on Form 8-K dated October 21, 1997 was filed by the
Registrant on October 29, 1997 with the Securities and Exchange Commission.
The Restated Certificate of Incorporation, Restated By-laws and Press Release
dated October 21, 1997 were filed as part of this Report.
<TABLE>
<CAPTION>
Exhibit
Number Description
- --------- ------------
<S> <C>
(3)(i) Restated Certificate of Incorporation
(3)(ii) Amended and Restated By-Laws
(99.1) Press Release dated October 21, 1997
</TABLE>
22
<PAGE>
SIGNATURES
PURSUANT to the requirements of the Exchange Act, the Issuer has duly
caused this Report to be signed on its behalf by the undersigned thereunto
duly authorized.
SEMELE GROUP INC.
By: /s/ Leonard G. Levine Date: November 14, 1997
-------------------------------
Leonard G. Levine, President
By: /s/ Joel L. Teglia Date: November 14, 1997
-----------------------------
Joel L. Teglia, Vice President
and Chief Financial Officer
23
<PAGE>
EXHIBIT 4
NUMBER SHARES
SHARES OF SEE REVERSE FOR
COMMON STOCK CERTAIN DEFINITIONS
CUSIP
SEMELE GROUP INC.
A DELAWARE CORPORATION
This Certifies That
is the the registered holder of
fully paid and non-assessable Shares of Common Stock, with par value of
$0.01, of SEMELE GROUP INC. (the "Corporation"), transferable on the books of
the Corporation by the holder hereof in person or by duly authorized
attorney, upon surrender of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by
the Transfer Agent and registered by the Registrar.
This Certificate is transferable in New York, New York or
Pittsburgh, Pennsylvania.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated: __________________, 19__
[SEAL]
/s/ /s/
-------------------- -------------------
President Chief Financial
Officer
COUNTERSIGNED AND REGISTERED:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
TRANSFER AGENT
BY AND REGISTRAR
AUTHORIZED SIGNATURE
<PAGE>
SEMELE GROUP INC.
REPURCHASE PROVISIONS AND TRANSFER RESTRICTIONS
-----------------------------------------------
The transfer of shares represented by this Certificate is subject to
certain prohibitions contained in Article VII of the Company's Amended and
Restated By-laws adopted October 21, 1997, in particular, until the earlier
of: (i) the expiration in 2011 of the net operating loss carryforwards which
the Corporation had as of December 31, 1996; or (ii) such date as shall be
fixed by the Board of Directors of the Corporation following a determination
by it either that there are no longer available to it any net operating loss
carryforwards or that, notwithstanding the remaining availability of net
operating loss carryforwards, maintenance of the transfer restrictions shall
no longer be in the best interests of the Corporation, except as otherwise
provided in said Article VII, no shares of Common Stock shall be transferred
or become subject to any agreement to transfer, in any manner whatsoever,
whether voluntarily or involuntarily, by sale, contract, warrant, option,
gift, operation of law or otherwise (any of the foregoing, a "Transfer"), to
any person who beneficially owns directly or through attribution (as
determined under Section 382 ("Code Section 382") of the Internal Revenue
Code of 1986, as amended from time to time (the "Code")), 4.9 percent or more
of the then issued and outstanding shares of Common Stock or who, after
giving effect to such Transfer, would beneficially own directly or through
attribution (as determined under Code Section 382) 4.9 percent or more of the
value of the then issued and outstanding shares of Common Stock (a
"4.9%-Holder").
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS:
<TABLE>
<S> <C>
TEN COM -- AS TENANTS IN COMMON UNIF GIFT MIN ACT-- _______ CUSTODIAN _______
TEN ENT -- AS TENANTS BY THE ENTIRETIES (CUST) (MINOR)
JT TEN -- AS JOINT TENANTS WITH RIGHT OF UNDER UNIFORM GIFTS TO MINORS
SURVIVORSHIP AND NOT AS TENANTS ACT _______
IN COMMON (STATE)
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE ABOVE LIST.
For Value received, ______________________________ hereby sell, assign, and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________________
________________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
</TABLE>
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________ Shares
of Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
____________________________________________________________________ Attorney
to transfer the said Shares on the books of the within-named Corporation
with full power of substitution in the premises.
Dated: _____________________, 19__
Signature Guaranteed: Signature
__________________________________ ______________________________
NOTICE
The signature to this assignment must correspond with the name as written
upon the face of the Certificate, in every particular, without alteration or
enlargement or any change whatever.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEMELE GROUP
INC.'S FORM 10QSB FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FROM 10QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 6,934,413
<SECURITIES> 0
<RECEIVABLES> 1,168,515
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,934,413
<PP&E> 9,961,991
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,054,209
<CURRENT-LIABILITIES> 741,427
<BONDS> 4,419,500
17,893,282
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 23,054,209
<SALES> 0
<TOTAL-REVENUES> 115,580
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,342,060
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,226,480)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,226,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,226,408)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
