Registration Rights Agreement - SEMELE GROUP INC - 3-30-2000 by SMLE-Agreements

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									Exhibit 10.19 REGISTRATION RIGHTS AGREEMENT This Agreement dated as of December 22, 1999, is entered into by and among Semele Group Inc., a Delaware corporation (the "Company"), and the persons listed on Exhibit A hereto (the "Sellers"). WHEREAS, the Company and the Sellers have entered into a Stock Purchase Agreement (the "Purchase Agreement") and a Put and Call Agreement ("Put and Call Agreement"), each dated the date hereof; WHEREAS, the Company and the Sellers desire to provide for certain arrangements with respect to the registration of shares of capital stock of the Company under the Securities Act of 1933, as amended, as set forth herein; NOW, THEREFORE, in consideration of the mutual promises and covenants contained in this Agreement, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms shall have the following respective meanings: "COMMISSION" means the Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act. "COMMON STOCK" means the Common Stock, $.10 par value, of the Company. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission issued under such Act, as they each may, from time to time, be in effect. "REGISTRATION STATEMENT" means a registration statement filed by the Company with the Commission for a public offering and sale of securities of the Company (other than a registration statement on Form S-8 or Form S-4, or their successors, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another corporation). "REGISTRATION EXPENSES" means the expenses described in Section 5. "REGISTRABLE SHARES" means (i) the Shares, (ii) any other shares of Common Stock of the Company issued in respect of the Shares (because of stock splits, stock dividends, reclassifications, recapitalizations or similar events); provided, however, that shares of Common Stock which are Registrable Shares shall cease to be Registrable Shares upon any sale pursuant to a Registration Statement or Rule 144 under the

Securities Act, or any sale in any manner to a person or entity which, by virtue of Section 12 of this Agreement, is not entitled to the rights provided by this Agreement. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission issued under such Act, as they each may, from time to time, be in effect. "SHARES" means the 510,000 shares of Common Stock of the Company that may be acquired by the Sellers pursuant to the Put and Call Agreement plus all other shares of Common Stock, if any, that are acquired by them in payment of the Notes referred to in the Purchase Agreement. "STOCKHOLDERS" means the Sellers and any persons or entities to whom the rights granted under this Agreement are transferred by the Sellers or their respective successors or assigns pursuant to Section 12 hereof. 2. REQUIRED REGISTRATIONS. (a) At any time after one year from the date hereof, a Stockholder or Stockholders holding in the aggregate at least 50% of the voting power of the Registrable Shares may request, in writing, that the Company effect the registration of the Registrable Shares owned by such Stockholder or Stockholders. If the holders initiating the registration intend to distribute the Registrable Shares by means of an underwriting, they shall so advise the Company in their request. Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all Stockholders. Such Stockholders shall have the right, by giving written notice to the Company within 30 days after the Company provides its notice, to elect to have included in such registration such of their Registrable Shares as such Stockholders may request in such notice of election. Thereupon, the Company shall, as expeditiously as possible, use its best efforts to effect the registration of all Registrable Shares which the Company has been requested to so register. (b) The Company shall not be required to effect more than one registration in total pursuant to paragraph (a) above. (c) If at the time of any request to register Registrable Shares pursuant to this Section 2, the Company is engaged or has fixed plans to engage within 90 days of the time of the request in a registered public offering as to which the Stockholders may include Registrable Shares pursuant to Section 3 or is engaged in any other activity which, in the good faith determination of the Company's Board of 2

Directors, would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that such request be delayed for a period not in excess of six months from the effective date of such offering or the date of commencement of such other material activity, as the case may be. (d) In connection with any offering under this Section 2 involving an underwriting, the right of other Stockholders to participate shall be conditioned on such Stockholders participating in such underwriting and execute the underwriting agreement with the underwriter chosen by the Stockholders initiating the offering to underwrite the offering. Further, if in the opinion of the underwriter managing any underwritten offering the registration of all the Registrable Shares sought to be included would materially and adversely affect such public offering, then the Company shall be required to include in the underwriting only that number of Registrable Shares that the managing underwriter believes may be sold without causing such material adverse effect, and any limitation on participation in the offering will be imposed pro rata with respect to all such Registrable Shares. 3. INCIDENTAL REGISTRATION. (a) Whenever the Company proposes to file a Registration Statement (other than pursuant to Section 2) at any time and from time to time, it will, prior to such filing, give written notice to all Stockholders of its intention to do so and, upon the written notice of a Stockholder or Stockholders given within 20 days after the Company provides such notice, the Company shall use its best efforts to cause all Registrable Shares which the Company has been requested by such Stockholder or Stockholders to register to be included in such Registration Statement; provided, that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 3(a) without obligation to any Stockholder. (b) In connection with any offering under this Section 3 involving an underwriting, the Company shall not be required to include any Registrable Shares in such underwriting unless the holders thereof participate in such underwriting and executing the underwriting agreement with the underwriter chosen by the Company to underwrite the offering. Further, if in the opinion of the managing underwriter the registration of all, or part of, the securities whose holders have a contractual incidental right to include them in the Registration Statement and as to which inclusion has been 3

requested pursuant to such right would materially and adversely affect such public offering, then the Company shall be required to include in the underwriting only that number of Registrable Shares, if any, which the managing underwriter believes may be sold without causing such adverse effect. If the number of Registrable Shares to be included in the underwriting in accordance with the foregoing is less than the total number of shares which the holders of Registrable Shares have requested to be included, then the holders of Registrable Shares who have requested registration shall participate in the underwriting pro rata based upon their total ownership of Registrable Shares. If any holder would thus be entitled to include more shares that such holder requested to be registered, the excess shall be allocated among other requesting holders pro rata based upon their total ownership of Registrable Shares. 4. REGISTRATION PROCEDURES. If and whenever the Company is required by the provisions of this Agreement to use its best efforts to effect the registration of any of the Registrable Shares under the Securities Act, the Company shall: (a) file with the Commission a Registration Statement with respect to such Registrable Shares and use its best efforts to cause that Registration Statement to become and remain effective. (b) as expeditiously as possible prepare and file with the Commission any amendments and supplements to the Registration Statement and the prospectus included in the Registration Statement as may be necessary to keep the Registration Statement effective until the earlier of such time as all such Registrable Shares are sold and the date that is 120 days from the effective date. (c) as expeditiously as possible furnish to each selling Stockholder such reasonable number of copies of the prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as the selling Stockholder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares owned by the selling Stockholder; and (d) as expeditiously as possible use its best efforts to register or qualify the Registrable Shares covered by the Registration Statement under the securities or Blue Sky laws of such states as the selling Stockholders shall reasonably request, and do any and all other acts and things that may be necessary or desirable to enable the selling Stockholders to consummate the public sale or other disposition in such states of the Registrable Shares owned by the selling Stockholder; PROVIDED, 4

HOWEVER, that the Company shall not be required in connection with this paragraph (d) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction. If the Company has delivered preliminary or final prospectuses to the selling Stockholders and after having done so the prospectus is supplemented or amended to comply with the requirements of the Securities Act, the Company will promptly notify the selling Stockholders and, if requested, the selling Stockholders shall immediately cease making offers of Registrable Shares and return all prospectuses to the Company. The Company shall promptly provide the selling Stockholders with revised prospectuses and, following receipt of the revised prospectuses, the selling Stockholders shall be free to resume making offers of the Registrable Shares. 5. ALLOCATION OF EXPENSES. The Company will pay all Registration Expenses of a registration under Section 2(a) of this Agreement; provided however, that if a registration under Section 2(a) is withdrawn at the request of the Stockholders requesting such registration (other than as a result of material adverse information concerning the business or financial condition of the Company which is made known to the Stockholders after the date on which such registration was requested), and if the requesting Stockholders elect not to have such registration counted as the registration requested under Section 2(a), the requesting Stockholders shall pay the Registration Expenses of such registration pro rata in accordance with the number of their Registrable Shares included in such registration. For purposes of this Section, the term "Registration Expenses" shall mean all expenses incurred by the Company in complying with this Agreement, including, without limitation, all registration and filing fees, exchange listing fees, printing expenses, fees and disbursements of counsel for the Company and the fees and expenses of one counsel selected by the selling Stockholders to represent the selling Stockholders, state Blue Sky fees and expenses and the expense of any special audits incident to or required by any such registration, but excluding underwriting discounts, selling commissions and the fees and expenses of selling Stockholders' own counsel (other than the counsel selected to represent all selling Stockholders). 5

6. INDEMNIFICATION. (a) In the event of any registration of any of the Registrable Shares under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the seller of such Registrable Shares, each underwriter of such Registrable Shares, and each other person, if any, who controls such seller or underwriter within the meaning of the Securities Act or the Exchange Act against any losses, claims, damages or liabilities, joint or several, to which such seller, underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities or Blue Sky laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the Registration Statement or any amendment or supplement to such Registration Statement, or arise out of or are based upon the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and the Company will reimburse each such seller, underwriter and controlling person for any legal or any other expenses reasonably incurred by such seller, underwriter or controlling person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any untrue statement or omission made in such Registration Statement, preliminary prospectus or prospectus, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such seller, underwriter or controlling person specifically for use in the preparation thereof. (b) In the event of any registration of any of the Registrable Shares under the Securities Act pursuant to this Agreement, each seller of Registrable Shares, severally and not jointly, will indemnify and hold harmless the Company, each of its directors and officers and each underwriter (if any) and each person, if any, who controls the Company or any such underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities, joint or several, to which the Company, such directors and officers, underwriter or controlling person may become subject under the Securities Act, Exchange Act, state securities or Blue Sky 6

laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained in the Registration Statement, or any amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such seller specifically for use in connection with the preparation of such Registration Statement, prospectus, amendment or supplement; provided, however, that the obligations of such Stockholders hereunder shall be limited to an amount equal to the proceeds to each Stockholder of Registrable Shares sold in connection with such registration. (c) Each party entitled to indemnification under this Section 6 (the "INDEMNIFIED PARTY") shall give notice to the party required to provide indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); and provided, further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 6 unless the Indemnifying Party's rights or defenses are materially prejudiced by the failure to provide such notice. The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall pay such expense if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between the Indemnified Party and any other party represented by such counsel in such proceeding. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the 7

claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemnified Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. (d) In order to provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any holder of Registrable Shares exercising rights under this Agreement, or any controlling person of any such holder, makes a claim for indemnification pursuant to this Section 6 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6 provides for indemnification in such case or (ii) contribution under the Securities Act may be required on the part of any such selling Stockholder or any such controlling person in circumstances for which indemnification is provided under this Section 6; then, in each such case, the Company and such Stockholder will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportions so that such holder is responsible for the portion represented by the percentage that the public offering price of its Registrable Shares offered by the Registration Statement bears to the public offering price of all securities offered by such Registration Statement, and the Company is responsible for the remaining portion; provided, however, that, in any such case, (A) no such holder will be required to contribute any amount in excess of the proceeds to it of all Registrable Shares sold by it pursuant to such Registration Statement and (B) no person or entity guilty of fraudulent misrepresentation, within the meaning of Section 11(f) of the Securities Act, shall be entitled to contribution for any person or entity who is not guilty of such fraudulent misrepresentation. 7. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING. In the event that Registrable Shares are sold pursuant to a Registration Statement in an underwritten offering pursuant to Section 2, the Company agrees to enter into an underwriting agreement containing customary representations and warranties with respect to the business and operations of an issuer of the securities being registered and customary covenants and agreements to be performed by such issuer, including without 8

limitation customary provisions with respect to indemnification by the Company of the underwriters of such offering. 8. INFORMATION BY HOLDER. Each holder of Registrable Shares included in any registration shall furnish to the Company such information regarding such holder and the distribution proposed by such holder as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement. 9. "STAND-OFF" AGREEMENT; BLACKOUT PERIODS. (a) "STAND-OFF" AGREEMENT. Each Stockholder, if requested by the Company and an underwriter of Common Stock or other securities of the Company, shall agree not to sell or otherwise transfer or dispose of any Registrable Shares or other securities of the Company held by such Stockholder for a specified period of time not to exceed 180 days following the effective date of a Registration Statement; provided, that all Stockholders holding not less than the number of shares of Common Stock held by such Stockholder (including shares of Common Stock issuable upon the conversion of convertible securities, or upon the exercise of options, warrants or rights) and all officers and directors of the Company enter into similar agreements. Such agreement shall be in writing in a form satisfactory to the Company and such underwriter. The Company may impose stop-transfer instructions with respect to the Registrable Shares or other securities subject to the foregoing restriction until the end of the stand-off period. (b) BLACKOUT PERIODS. (i) At any time when a Registration Statement on Form S-3 (or its successor) effected pursuant to this Agreement is effective, upon written notice from the Company to the Stockholders participating in such Registration Statement that the Company determines in the good faith judgment of the Board of Directors of the Company, with the advice of counsel, that such Stockholders' sale of Registrable Shares pursuant to the Registration Statement would require disclosure of non-public material information the disclosure of which would have a material adverse effect on the Company (an "INFORMATION BLACKOUT"), such Stockholders shall suspend sales of Registrable Shares pursuant to such Registration Statement until the earliest of: 9

(x) the date upon which such material information is disclosed to the public or ceases to be material; (y) 60 days after the Company makes a good faith determination that such material information ceases o be material; and (z) such time as the Company notifies such Stockholders that sales pursuant to such Registration Statement may be resumed. (The number of days from such suspension of sales by such Stockholders until the day when such sales may be resumed under CLAUSE (X), (Y) or (Z) hereof is hereinafter called a "SALES BLACKOUT PERIOD.") (ii) Any delivery by the Company of notice of an Information Blackout during the 90 days immediately following effectiveness of any Registration Statement on Form S-3 effected pursuant to this Agreement shall give such Stockholders the right, by written notice to the Company within 20 business days after the end of such Sales Blackout Period, to cancel such registration and obtain one additional registration right (a "BLACKOUT TERMINATION RIGHT") under this Agreement. (iii) If there is an Information Blackout and if such Stockholders do not exercise their cancellation right, if any, pursuant to Section 9(b)(ii) hereof, or, if such cancellation right is not available, the time period set forth in SECTION 11(A) hereof shall be extended for a number of days equal to the number of days in the Sales Blackout Period. 10. RULE 144 REQUIREMENTS. The Company agrees to: (a) Comply with the requirements of Rule 144(c) under the Securities Act with respect to current public information about the Company; (b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) Furnish to any holder of Registrable Shares upon request a written statement by the Company as to its compliance with the requirements of such Rule 144(c) and of the reporting requirements of the Securities Act and the Exchange 10

Act, a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as such holder may reasonably request to avail itself of any similar rule or regulation of the Commission allowing it to sell any such securities without registration. 11. TERMINATION OF THIS AGREEMENT. The rights provided to any person under this Agreement shall terminate, and be of no further force or effect, on the earliest to occur of (a) of the fifteenth anniversary of the date of this Agreement; (b) the sale of all or substantially all of the assets or business of the Company by merger, sale of assets, sale of securities or otherwise; and (c) the written agreement of holders of at least 50% of the voting power of the Registrable Shares to terminate this Agreement. 12. TRANSFERS OF RIGHTS. This Agreement, and the rights and obligations of each Seller hereunder, may be assigned by such Seller to any person or entity to which Registrable Shares are transferred by such Seller, provided, however, that no such transfer may be effected without the written consent of the Company; and each such transferee shall be deemed a "Seller" for purposes of this Agreement. A transferee to whom rights are transferred pursuant to this Section 12 may not again transfer such rights to any other person or entity, other than as provided in this Section. 13. NOTICES. All notices, requests, consents and other communications under this Agreement shall be in writing and shall become effective when received. Notices shall be deemed to have been duly received if delivered by hand or sent by a reputable overnight delivery service or mailed by first class certified or registered mail, return receipt requested, postage prepaid: If to the Company, at One Canterbury Green, 201 Broad Street, Stamford, Connecticut 06901, Attention: President (or at such other address or addresses as may have been furnished in writing by the Company to the Sellers in accordance with this Section) with a copy to Nixon Peabody LLP, 101 Federal Street, Boston, Massachusetts 02110, Attention: Joan Barkhorn Hass. If to a Seller, at his address set forth on Exhibit A (or at such other address or addresses as may have been furnished to the Company in writing by such Seller in accordance with this Section). 11

14. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings relating to such subject matter. 15. AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in this Agreement, any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the holders of at least 50% of the voting power of the Registrable Shares; provided, that this Agreement may be amended with the consent of the holders of less than all Registrable Shares only in a manner which effects all Registrable Shares in the same fashion. 16. COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 17. HEADINGS. The headings of the sections, subsections and paragraphs of this Agreement have been added for convenience only and shall not be deemed to be a part of this Agreement. 18. SEVERABILITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision. 19. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the day and year first above written. COMPANY: SEMELE GROUP INC.
By: /s/ Gary M. Romano --------------------------Gary M. Romano, Chief Financial Officer

SELLERS:
/s/ Gary D. Engle --------------------------Gary D. Engle

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/s/ James A. Coyne -------------------------------------James A. Coyne

/s/ Wayne E. Engle -------------------------------------Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle -------------------------------------Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle -------------------------------------Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle -------------------------------------Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998

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EXHIBIT A SELLER Gary D. Engle Semele Group Inc. One Canterbury Green (8th Floor) Stamford, CT 06901 James A. Coyne Semele Group Inc. One Canterbury Green (8th Floor) Stamford, CT 06901 Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998 88 Broad Street Boston, MA 02110 Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998 88 Broad Street Boston, MA 02110 Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998 88 Broad Street Boston, MA 02110 Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 88 Broad Street Boston, MA 02110

Exhibit 10.20 SECURITY AGREEMENT AND COLLATERAL AGENCY AGREEMENT THIS SECURITY AGREEMENT made as of the 22nd day of December, 1999, by and among (i) Semele Group Inc., a Delaware corporation (the "Pledgor"), (ii) Gary D. Engle; James A. Coyne; Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998; Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998; Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998; and Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 (each a "Secured Party" and collectively the "Secured Parties"), and (iii) Gary D. Engle as agent for the Secured Parties (the "Collateral Agent"); W I T N E S S E T H: WHEREAS, pursuant to a Stock Purchase Agreement dated as of the date hereof (the "Purchase Agreement") the Pledgor purchased from the Secured Parties an aggregate of 2,550 shares of the Voting and Non-Voting Common Stock, $.01 par value (the "Stock"), of Equis II Corporation, a Delaware corporation (the "Company"), as set forth on EXHIBIT A, which are 85% of the shares of capital stock of the Company issued and outstanding; WHEREAS, the Pledgor paid for the Stock by delivery to the Secured Parties of Promissory Notes of the Pledgor in the aggregate original principal amount of $19,586,000 (the "Notes"); WHEREAS, the Stock is currently subject to a pledge previously executed by the Secured Parties securing certain indebtedness of the Company to Fleet Bank, N.A., totalling $19,540,000 at September 30, 1999; and WHEREAS, the Pledgor and the Secured Parties desire to enter into this Agreement whereby the Pledgor will secure its commitments under the Notes by a pledge of the Stock which is junior only to the currently existing pledge and which will become a first priority pledge when such indebtedness to Fleet Bank has been repaid and such prior pledge has been released; NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. RIGHTS OF PARTIES HEREUNDER SUBJECT TO PRIOR RIGHTS OF FLEET BANK. The parties to this Agreement acknowledge and agree that their respective rights and obligations hereunder are subject to the prior and superior rights of Fleet Bank, N.A., as pledgee of the Stock, which pledge was made pursuant to a loan agreement among the Company, Fleet Bank and other interested parties dated July 17, 1997, as amended (the "Acquisition Credit Agreement"), which pledge includes the right of Fleet Bank to vote the Stock after an event of default under the Acquisition Credit Agreement.

2. PLEDGE. In consideration of the acceptance by the Secured Parties of the Notes and the undertakings of the Pledgor in this Agreement, the Pledgor hereby grants to the Collateral Agent as agent for the Secured Parties a security interest in the Stock together with all of the Pledgor's rights to receive distributions in respect to such securities, whether in cash, securities or other property, and whether during the continuance of or on account of the liquidation of the issuer of such securities, and all of its other rights as a holder of securities of such issuer, and all of its rights, title and interest in and to any certificate, instrument or other evidence of any of the foregoing, and together with any and all substitutions and replacements thereof, including any securities or other instruments into which any of the foregoing may at any time and from time to time be converted or exchanged (the "Pledged Stock"). The parties hereto acknowledge and agree that such pledge is junior to a prior pledge of the Stock by the Secured Parties to Fleet Bank, N.A., to secure certain indebtedness of the Company totalling $19,540,000 at September 30, 1999, and that such pledge will become a first priority pledge when such indebtedness has been repaid and such prior pledge has been released. The Pledgor covenants upon such repayment and release to promptly deliver the Certificates representing the Pledged Stock accompanied by eight separate stock powers duly endorsed in blank by the Pledgor to the Collateral Agent as agent for the Secured Parties, to be held on the terms and conditions contained herein. The Pledgor hereby appoints the Collateral Agent as agent for the Secured Parties as its attorney in fact to cause the transfer of the Pledged Stock on the books of the Company to the Secured Parties or their respective designees, ratably in proportion to their respective interests as shown on Exhibit A hereto, upon the occurrence of an "Event of Default," as such term is defined in the Notes. The Collateral Agent as agent for the Secured Parties shall hold the Pledged Stock as security for the purposes described herein and shall not encumber or dispose of such property except in accordance with the provisions of this Agreement. 3. STOCK DIVIDEND OR STOCK SPLIT; LIQUIDATION, RECAPITALIZATION, MERGER, ETC. Any additional shares of capital stock paid upon or distributed with respect to any of the Pledged Stock in the event of any stock dividend or stock split declared by the Company or any issuer thereof and any sums paid upon or with respect to any of the Pledged Stock upon the merger, consolidation, liquidation, recapitalization, dissolution or reorganization of the Company or any other issuer thereof shall be paid over to the Collateral Agent as agent for the Secured Parties to be held by him as security for the Notes; and in case any distribution of capital shall be made upon or with respect to any of the Pledged Stock or any property shall be distributed upon or with respect to any of the Pledged Stock pursuant to the recapitalization or reclassification of the capital of the issuer thereof or pursuant to the reorganization, merger or consolidation thereof, the property so distributed shall be delivered to the Collateral Agent as agent for the Secured Parties to be held by him as security for the Notes. All securities, sums of money and other property paid or distributed in respect of the Pledged Stock upon any such stock dividend, stock split, merger, consolidation, liquidation, dissolution, reorganization, recapitalization or reclassification which are received by the Pledgor shall, until paid or delivered -2-

to the Collateral Agent as agent for the Secured Parties, be held in trust for the Secured Parties as security for the Notes. 4. WARRANTY OF TITLE. The Pledgor warrants that it has good and marketable title to the Pledged Stock pledged hereunder on the date hereof, subject to no pledge, lien, security interest, charge, option, restriction or other encumbrance except as set forth on Exhibit B hereto, and that it has power, authority and legal right to pledge such Pledged Stock pursuant to this Agreement. The Pledgor covenants that it will defend the Secured Parties' rights and security interest in such Pledged Stock against the claims and demands of all persons whomsoever except for those persons described on Exhibit B, and their successors and assigns; and the Pledgor covenants that it will have the like title to and right to pledge all other property hereafter pledged with the Collateral Agent as agent for the Secured Parties hereunder and will likewise defend the Secured Parties' rights and security interest therein. 5. DIVIDENDS AND VOTING RIGHTS. Unless and until an Event of Default shall have occurred and be continuing, the Pledgor shall be entitled to receive all cash dividends paid in respect of the Pledged Stock and to vote the Pledged Stock and to give consents, waivers and ratifications in respect of the Pledged Stock; provided, however, that no vote shall be cast, or consent, waiver or ratification given or action taken which would be inconsistent with or violate any provisions of this Agreement or the Notes. All such rights of the Pledgor to receive any cash dividends shall cease in case an Event of Default shall have occurred and be continuing, and in that case cash dividends shall be paid over by the Pledgor to the Collateral Agent as agent for the Secured Parties to be applied by him to the satisfaction of the Notes, and all cash dividends received by the Pledgor shall, until so paid to the Collateral Agent as agent for the Secured Parties, be held in trust for the Secured Parties as security for the Notes. All such rights of the Pledgor to vote and give consents, waivers and ratifications with respect to the Pledged Stock shall, at the Collateral Agent`s option as evidenced by the Collateral Agent's notifying the Pledgor of such election, cease in case an Event of Default shall have occurred and be continuing, and in that case the Collateral Agent as agent for the Secured Parties shall have all such rights. 6. DISCHARGE OF OBLIGATIONS. Upon payment and performance in full of all obligations to be performed by the Pledgor under the Notes, the Collateral Agent as agent for the Secured Parties shall deliver to the Pledgor all of the certificates representing the Pledged Stock together with any stock powers held by the Collateral Agent as agent for the Secured Parties as a result of the pledge contained herein. -3-

7. DEFAULT. Upon the occurrence of an Event of Default, the Collateral Agent as agent for the Secured Parties shall have the rights and remedies provided in the Uniform Commercial Code of Massachusetts, and in that connection the Collateral Agent as agent for the Secured Parties may, upon 5 days' notice to each member of the board of directors of the Pledgor sent by registered mail and without liability for any diminution in price which may have occurred, sell all of the Pledged Stock in such manner and for such price as the Collateral Agent as agent for the Secured Parties may determine. It is agreed by the Pledgor that such notice is reasonable. At any public sale, the Collateral Agent as agent for the Secured Parties shall be free to purchase all or any part of the Pledged Stock. Out of the proceeds of any sale, the Collateral Agent as agent for the Secured Parties may retain an amount equal to the principal and interest then due under the Notes, plus the amount of the expenses of sale, including legal costs and reasonable attorneys' fees, and shall pay any balance of such proceeds to the Pledgor. 8. COLLATERAL AGENT. Each Secured Party, by executing this Agreement, hereby appoints the Collateral Agent and the Collateral Agent hereby accepts such appointment, as collateral agent hereunder, and each of the Secured Parties irrevocably authorizes the Collateral Agent to act as the agent of such Secured Party. The Pledgor may tender performance of the Notes and give any notices required or permitted to be given hereunder to the Collateral Agent on behalf of all of the Secured Parties and may rely on all communications from and to the Collateral Agent as having been given or received on behalf of all of the Secured Parties. 9. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Pledgor, the Collateral Agent and the Secured Parties and their respective successors and assigns; provided, however, that neither the Pledgor nor the Collateral Agent may assign this Agreement without the consent of the other. Any purchaser, assignee or transferee of any of the Notes shall become vested with and entitled to exercise all the powers and rights of a Secured Party hereunder upon execution of an instrument agreeing to be bound by the terms of this Agreement. 10. OTHER PROVISIONS. (a) WAIVERS; RIGHTS AND REMEDIES. No delay or omission on the part of the Secured Parties in exercising any right or remedy shall operate as a waiver thereof or of any other right or remedy. No waiver by the Secured Parties shall be effective unless made in writing, and a waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All the Secured Parties' rights and remedies shall be cumulative and may be exercised singularly or concurrently, and nothing herein shall be deemed to limit in any way any rights the Secured Parties might otherwise have under any other instrument or by law, including, without limiting the generality thereof, the right to negotiate any note or other instrument together with any collateral specifically described herein. -4-

(b) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and may be amended only by an instrument in writing referring to this Agreement executed by the Pledgor and the Secured Parties. (c) GOVERNING LAW. This Agreement shall be governed by and construed and interpreted according to the laws of the Commonwealth of Massachusetts. (d) NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered in hand or deposited in the United States mail, postage prepaid, or with Federal Express or comparable overnight delivery service, addressed as follows: (i) if to the Pledgor: Each Member of the Board of Directors at his address shown on EXHIBIT B (ii) if to the Collateral Agent: Gary D. Engle c/o Equis Financial Group Limited Partnership 88 Broad Street Boston, MA 02110 or to such other address, or in the case of any change in the Board of Directors, to such other name and address, as a party shall designate by notice to the other. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. SEMELE GROUP INC.
/s/ Gary D. Engle -----------------------------------Gary D. Engle, as Collateral Agent By: /s/ Gary M. Romano --------------------------Name: Gary M. Romano Title: Chief Financial Officer

/s/ Gary D. Engle -----------------------------------Gary D. Engle

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/s/ James A. Coyne ------------------------------------------James A. Coyne

/s/ Wayne E. Engle ------------------------------------------Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------------Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------------Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------------Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998

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EXHIBIT A
NAME VOTING 382 42 None NUMBER OF SHARES NON-VOTING 1,054 816 64

Gary D. Engle James A. Coyne Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 TOTALS

None

64

None

64

None ---424 ====

64 ----2,126 =====

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EXHIBIT B
Walter E. Auch 2700 Crystal Drive Crystal Lake Beulah, MI 49617 (Summer) 6001 North 62nd Place Paradise Valley, AZ 85253 (Winter)

Joseph W. Bartlett, Esq. Morrison & Foerster LLP 1290 Avenue of the Americas New York, NY 10104-0050

James A. Coyne Semele Group Inc. One Canterbury Green, 8th Floor 201 Broad Street Stamford, CT 06910

Gary D. Engle One Canterbury Green, 8th Floor 201 Broad Street Stamford, CT 06910

Robert M. Ungerleider Felcher, Fox & Litner 18 East 48th Street New York, NY 10017

Exhibit 10.21 SECURITY AGREEMENT THIS SECURITY AGREEMENT made as of the 20th day of January, 2000, by and between Semele Group Inc., a Delaware corporation (the "Pledgor"), and Equis Financial Group Limited Partnership, a Massachusetts limited partnership (the "Secured Party"), W I T N E S S E T H: WHEREAS, pursuant to an Agreement for Purchase and Sale of Special Beneficiary Interests dated November 18, 1999 (the "Purchase Agreement"), the Pledgor has purchased from the Secured Party a beneficial interest in each of the four following trusts, each such interest being defined in the Second Amended and Restated Declaration of Trust, as amended to date, of each of the trusts as a "Special Beneficiary Interest": AFG Investment Trust A AFG Investment Trust B AFG Investment Trust C AFG Investment Trust D (such Special Beneficiary Interests collectively, the "Special Beneficiary Interests," and such Trusts collectively the "Trusts"); WHEREAS, the Pledgor has paid for the Special Beneficiary Interests by delivery of the Pledgor's promissory note payable to the Secured Party in the principal amount of $9,652,500 (the "Note"); and WHEREAS, the Pledgor has agreed to secure its commitments under the Note by a pledge of the Special Beneficiary Interests now owned by the Pledgor; NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: 1. PLEDGE. In consideration of the acceptance by the Secured Party of the Note and the undertakings of the Pledgor in this Agreement, the Pledgor hereby grants a security interest to the Secured Party in the Special Beneficiary Interests together with all of the Pledgor's rights to receive distributions in respect to such securities, whether in cash, securities or other property, and whether during the continuance of or on account of the liquidation of any issuer of such securities, and all of its other rights as a holder of securities of each such issuer, and all of its rights, title and interest in and to any certificate, instrument or other evidence of any of the foregoing, and together with any and all substitutions and replacements thereof, including any securities or other instruments into which any of the foregoing may at any time and from time to time be converted or exchanged (the "Pledged Interests"). An Assignment form duly endorsed in blank by the Pledgor is herewith delivered to the Secured Party, to be held on the terms and conditions

contained herein. The Pledgor hereby appoints the Secured Party as its attorney in fact to cause the transfer of the Pledged Interests on the books of the Trusts to the Secured Party or its designee upon the occurrence of an "Event of Default," as such term is defined in the Note. The Secured Party shall hold the Pledged Interests as security for the purposes described herein and shall not encumber or dispose of such property except in accordance with the provisions of this Agreement. 2. LIQUIDATION, RECAPITALIZATION, ETC. Any sums paid upon or with respect to any of the Pledged Interests upon the consolidation, liquidation, recapitalization, dissolution or reorganization of any of the Trusts or any other issuer thereof shall be paid over to the Secured Party to be held by it as security for the Note; and in case any distribution of capital shall be made upon or with respect to any of the Pledged Interests or any property shall be distributed upon or with respect to any of the Pledged Interests pursuant to the recapitalization or reclassification of the capital of the issuer thereof or pursuant to the reorganization or consolidation thereof, the property so distributed shall be delivered to the Secured Party to be held by it as security for the Note. All sums of money and other property paid or distributed in respect of the Pledged Interests upon any such stock consolidation, liquidation, dissolution, reorganization, recapitalization or reclassification which are received by the Pledgor shall, until paid or delivered to the Secured Party, be held in trust for the Secured Party as security for the Note. 3. WARRANTY OF TITLE. The Pledgor warrants that it has good and marketable title to the Pledged Interests pledged hereunder on the date hereof, subject to no pledge, lien, security interest, charge, option, restriction or other encumbrance, and that it has power, authority and legal right to pledge such Pledged Interests pursuant to this Agreement. The Pledgor covenants that it will defend the Secured Party's rights and security interest in such Pledged Interests against the claims and demands of all persons whomsoever; and the Pledgor covenants that it will have the like title to and right to pledge all other property hereafter pledged with the Secured Party hereunder and will likewise defend the Secured Party's rights and security interest therein. 4. DISTRIBUTIONS AND VOTING RIGHTS. Unless and until an Event of Default shall have occurred and be continuing, the Pledgor shall be entitled to receive all cash distributions paid in respect of the Pledged Interests and to vote the Pledged Interests and to give consents, waivers and ratifications in respect of the Pledged Interests; provided, however, that no vote shall be cast, or consent, waiver or ratification given or action taken which would be inconsistent with or violate any provisions of this Agreement or the Note. All such rights of the Pledgor to receive any cash distributions shall cease in case an Event of Default shall have occurred and be continuing, and in that case cash distributions shall be paid over by the Pledgor to the Secured Party to be applied by it to the satisfaction of the Note, and all cash distributions received by the Pledgor shall, until so paid to the Secured Party, be held in trust for the Secured Party as security for the Note. All such rights of the Pledgor to vote and give consents, waivers and ratifications with respect to the Pledged Interests shall, at -2-

the Secured Party's option as evidenced by the Secured Party's notifying the Pledgor of such election, cease in case an Event of Default shall have occurred and be continuing, and in that case the Secured Party shall have all such rights. 5. DISCHARGE OF OBLIGATIONS. Upon payment and performance in full of all obligations to be performed by the Pledgor under the Note, the Secured Party shall transfer to the Pledgor all of the Pledged Interests and all rights received by the Secured Party as a result of the pledge contained herein. 6. DEFAULT. Upon the occurrence of an Event of Default, the Secured Party shall have the rights and remedies provided in the Uniform Commercial Code of Massachusetts, and in that connection the Secured Party may, upon 5 days' notice to the Pledgor sent by registered mail and without liability for any diminution in price which may have occurred, sell all of the Pledged Interests in such manner and for such price as the Secured Party may determine. It is agreed by the Pledgor that such notice is reasonable. At any public sale, the Secured Party shall be free to purchase all or any part of the Pledged Interests. Out of the proceeds of any sale, the Secured Party may retain an amount equal to the principal and interest then due under the Note, plus the amount of the expenses of sale, including legal costs and reasonable attorneys' fees, and shall pay any balance of such proceeds to the Pledgor. 7. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Pledgor and the Secured Party and their successors and assigns; provided, however, that neither party may assign this Agreement without the consent of the other. 8. OTHER PROVISIONS. (a) WAIVERS; RIGHTS AND REMEDIES. No delay or omission on the part of the Secured Party in exercising any right or remedy shall operate as a waiver thereof or of any other right or remedy. No waiver by the Secured Party shall be effective unless made in writing, and a waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future occasion. All the Secured Party's rights and remedies shall be cumulative and may be exercised singularly or concurrently, and nothing herein shall be deemed to limit in any way any rights the Secured Party might otherwise have under any other instrument or by law, including, without limiting the generality thereof, the right to negotiate any note or other instrument together with any collateral specifically described herein. (b) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and may be amended only by an instrument in writing referring to this Agreement executed by the Pledgor and the Secured Party. -3-

(c) GOVERNING LAW. This Agreement shall be governed by and construed and interpreted according to the laws of the Commonwealth of Massachusetts. (d) NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed to have been duly given if delivered in hand or deposited in the United States mail, postage prepaid, or with Federal Express or comparable overnight delivery service, addressed as follows: (i) if to the Pledgor: Semele Group Inc. 200 Nyala Farms Westport, CT 06880 Attn: President (ii) if to the Secured Party: Equis Financial Group Limited Partnership 88 Broad Street Boston, MA 02110 Attn: Chief Executive Officer or to such other address as a party shall designate by notice to the other. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. SEMELE GROUP INC.
By: /s/ James A. Coyne --------------------------------------James A. Coyne Title: President

EQUIS FINANCIAL GROUP LIMITED PARTNERSHIP By: Equis Corporation, its general partner
By: /s/ Gary D. Engle --------------------------------------Gary D. Engle Title: President

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Exhibit 10.22 PUT AND CALL AGREEMENT THIS AGREEMENT made as of the 22nd day of December, 1999, by and between (i) Gary D. Engle; James A. Coyne; Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998; Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998; Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998; and Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 (each a "Seller" and collectively the "Sellers"); and (ii) Semele Group Inc., a Delaware corporation (the "Buyer"); WITNESSETH: WHEREAS, the Sellers and the Buyer have entered into a certain Stock Purchase Agreement dated as of December 16, 1999 (the "Purchase Agreement"), providing for the sale by the Sellers and the purchase by the Buyer of 85 percent of the issued and outstanding shares of capital stock of Equis II Corporation, a Delaware corporation (the "Company"); WHEREAS, following the closing of the purchase and sale contemplated by the Purchase Agreement, the Sellers will continue to own 15 percent of the issued and outstanding shares of capital stock of the Company, each Seller owning the number of shares of Voting Common Stock and Non-Voting Common Stock, each $.01 par value, of the Company set forth opposite their respective names on Exhibit A (collectively, the "Shares"); WHEREAS, the Sellers desire to have the ability to sell the Shares to the Buyer; and WHEREAS, the Buyer desires to have the ability to purchase the Shares from the Sellers; NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter set forth, the Sellers and the Buyer hereby agree as follows: 1. PUT RIGHTS. Commencing on the date on which the stockholders of the Buyer shall have approved the payment by the Buyer to the Sellers of the purchase price provided for in Section 3 hereof, and continuing for a period of one year thereafter, Gary D. Engle, as representative of the Sellers, may, but only for the purchase price provided for in Section 3, require the Buyer to purchase all of the Shares upon the terms contained in this Agreement by giving written notice thereof to the Buyer in accordance with the terms of Section 8(b) hereof. If no such approval shall have been obtained by December 31, 2000, then the rights of Mr. Engle and the Sellers set forth in the preceding sentence shall terminate. Any such written notice shall state that the Sellers have exercised their rights under this Section 1. Upon the giving of such notice to the Buyer, the Sellers shall become and be absolutely and unconditionally obligated to sell to the Buyer, and the Buyer shall become and be absolutely and unconditionally obligated to purchase from the Sellers, all of the Shares in accordance with the terms of this Agreement. The Sellers may exercise the foregoing right only in respect of all the Shares.

2. CALL RIGHTS. Commencing on the date on which the stockholders of the Buyer shall have approved the payment by the Buyer to the Sellers of the purchase price provided for in Section 3 hereof, and continuing for a period of one year thereafter, the Buyer may require the Sellers to sell all of the Shares upon the terms contained in this Agreement, but only for the purchase price provided for in Section 3, by giving written notice thereof to the Sellers in accordance with the terms of Section 8(b) hereof. If no such approval shall have been obtained by [June 30, 2000], then the rights of the Buyer set forth in the preceding sentence shall terminate. Any such written notice shall state that the Buyer has exercised its rights under this Section 2. Upon the giving of such notice to the Sellers, the Sellers shall become and be absolutely and unconditionally obligated to sell to the Buyer, and the Buyer shall become and be absolutely and unconditionally obligated to purchase from the Sellers, all of the Shares in accordance with the terms of this Agreement. The Buyer may exercise the foregoing right only in respect of all the Shares. 3. PURCHASE PRICE. The purchase price for the Shares shall be 510,000 shares of the Common Stock, $.10 par value, of the Buyer. 4. PAYMENT OF PURCHASE PRICE. The Buyer, within 30 days after (a) receiving notice from the Sellers in accordance with Section 1 hereof, or (b) giving notice to the Sellers in accordance with Section 2 hereof, shall pay to the Sellers the entire amount of the purchase price for the Shares by delivering to the Sellers certificates evidencing shares of Common Stock of the Buyer in the names and in the amounts shown on Exhibit B within such 30-day period. 5. TRANSFER OF THE SHARES TO THE BUYER. Simultaneously with the payment of the purchase price to the Sellers in accordance with the provisions of Section 4 above, the Sellers shall deliver to the Buyer the certificates representing the Shares purchased, duly endorsed for transfer to the Company or accompanied by one or more duly executed stock powers, and shall take all such further action as may then be necessary to transfer title to the Shares to the Buyer free and clear of all liens, encumbrances and interests of others except those shown on Exhibit C. 6. RESTRICTIONS. The Sellers shall not sell, assign, transfer, pledge, or dispose of any or all of their respective Shares except as provided for herein or as otherwise agreed to in writing by all the parties hereto. Each certificate representing Shares held by the Sellers shall bear a legend substantially as follows: "The shares of stock represented by this certificate are subject to restrictions on transfer as set forth in a Put and Call Agreement dated December 22, 1999, between the Sellers identified therein and Semele Group Inc. No transfer of any shares represented -2-

by this certificate shall be valid unless made in accordance with the provisions of such Agreement." 7. OTHER PROVISIONS. (a) AMENDMENT. This Agreement may not be amended, modified or revoked in whole or in part except by a writing signed by each of the parties hereto. (b) NOTICES. All notices given shall be in writing and shall become effective when received. Notices shall be deemed to have been duly received if delivered by hand or by overnight delivery service or mailed by certified or registered mail, return receipt, requested, postage prepaid, to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section): If to the Sellers: Gary D. Engle Equis Financial Group Limited Partnership 88 Broad Street Boston, MA 02110 with a copy to: Nixon Peabody LLP 101 Federal Street Boston, Massachusetts 02110-1832 Attn: Joan Barkhorn Hass and, if to the Buyer: Semele Group Inc. One Canterbury Green, 8th Floor Stamford, CT 06901 Attn: James A. Coyne with a copy to: Shefsky & Froelich Ltd. 444 North Michigan Avenue Chicago, IL 60611 Attn: Michael J. Choate (c) BINDING AGREEMENT; GOVERNING LAW. This Agreement shall be binding upon and inure to the benefit of the Sellers and the Buyer and their respective heirs, successors, assigns and legal representatives. This Agreement shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. -3-

IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date first above written.
THE SELLERS: /s/ Gary D. Engle ------------------------------------Gary D. Engle SEMELE GROUP INC. By: /s/ Gary M. Romano --------------------------Gary M. Romano, Chief Financial Officer

/s/ James A. Coyne ------------------------------------James A. Coyne

/s/ Wayne E. Engle ------------------------------------Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998

/s/ Wayne E. Engle ------------------------------------Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998

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EXHIBIT A
NUMBER OF SHARES OWNED VOTING 68 8 None NON-VOTING 186 144 11

NAME

Gary D. Engle James A. Coyne Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 TOTALS

None

11

None

11

NONE

11

76

374

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EXHIBIT B
NUMBER OF PURCHASE PRICE SHARES 287,300 171,700 12,750

NAME Gary D. Engle James A. Coyne Wayne Ellis Engle, Trustee, Staci Albury Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Kristen Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Sydney Peyton Engle Trust u/i/t dated July 21, 1998 Wayne Ellis Engle, Trustee, Zoe P. Engle Trust u/i/t dated July 21, 1998 TOTAL

12,750

12,750

12,750

510,000

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EXHIBIT C LIENS AND ENCUMBRANCES ON SHARES The Shares referred to in the accompanying Put and Call Agreement, which are to be purchased by the Buyer, are pledged to Fleet Bank, N.A., a national banking association having an office at 592 Fifth Avenue, New York, New York 10036 (the "Bank") as partial collateral for that certain loan agreement between Equis II Corporation, the Bank and other interested parties dated July 17, 1997, as amended (the "Acquisition Credit Agreement"), together with related agreements. The Shares are also subject to an irrevocable proxy giving the Bank the right to vote the Shares after an event of default under the Acquisition Credit Agreement. At September 30, 1999, the outstanding principal balance of indebtedness under the Acquisition Credit Agreement was $19,540,000.

EXHIBIT 13 SEMELE GROUP INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Pages ----Management's Discussion and Analysis of Financial Condition or Plan of Operation Report of Independent Auditors Consolidated Balance Sheets as of December 31, 1999 and 1998 Consolidated Statements of Operations For the Years Ended December 31, 1999 and 1998 Consolidated Statements of Stockholders' Equity For the Years Ended December 31, 1999 and 1998 Consolidated Statements of Cash Flows For the Years Ended December 31, 1999 and 1998 Notes to Consolidated Financial Statements 19-20 21 22

23

24

25 26-35

All schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements and notes thereto.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION GENERAL Certain statements in this annual report that are not historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Without limiting the foregoing, words such as "anticipates", "expects", "intends", "plans" and similar expressions are intended to identify forward-looking statements. These statements are subject to a number of risks and uncertainties including the Company's ability to successfully implement a growth-oriented business plan. Actual results could differ materially from those described in any forward-looking statements. YEAR 2000 ISSUE The Company uses information systems provided by Equis Financial Group Limited Partnership ("EFG") and has no information systems of its own. EFG completed all Year 2000 readiness work prior to December 31, 1999 and did not experience any significant problems. Additionally, EFG is not aware of any outside customer or vendor that experienced a Year 2000 issue that would have a material effect on the Company's results of operations, liquidity, or financial position. However, EFG has no means of ensuring that all customers, vendors and third-party servicers have conformed to Year 2000 standards. The effect of this risk to the Company is not determinable. OVERVIEW The Company was established in 1987 to invest primarily in short-term, junior, pre-development and construction mortgage loans. Subsequently, the Company became owner of various real estate assets through foreclosure proceedings in connection with its mortgages. For the years 1993, 1994 and 1995, the Company elected to be treated as a real estate investment trust (REIT) for income tax purposes. Effective January 1, 1996, the Company revoked its REIT status and became a taxable "C" corporation. Since then, the Company has attempted to seek out ways to maximize shareholder value and take advantage of investment opportunities where its significant loss carryforwards for federal income tax purposes (approximately $90 million at December 31, 1999) can make it a value-added buyer. In 1999 and 1998, the Company made certain investments with affiliated parties where its income tax loss carryforwards could be utilized and otherwise enable the Company to expand its asset mix beyond its principal real estate asset, an ownership interest in a 274 acre land parcel located in Southern California known as Rancho Malibu. The Company intends to develop the Rancho Malibu property in the future and is in the process of obtaining various permits that are necessary to commence development. In addition, the Company holds a 0.3% beneficial interest in a liquidating trust, established for the benefit of a group of unsecured creditors of a previous borrower of the Company. Significant investments in 1999 and 1998 are summarized below: EQUIS II CORPORATION In December 1999, the Company acquired an 85% equity interest in Equis II Corporation ("Equis II") that the Company financed by issuing purchase-money notes totaling $19,586,000 to the selling Equis II stockholders. In connection with this investment, the Company also acquired a Special Beneficiary interest in four Delaware Business Trusts known as AFG Investment Trust A, AFG Investment Trust B, AFG Investment Trust C, and AFG Investment Trust D (collectively, the "Trusts") for $9,652,500 that the Company financed by issuing a nonrecourse purchase-money note. The stockholders of Equis II from whom the Company acquired 85% of Equis II are Gary D. Engle, President, Chief Executive Officer and Chairman of the Board of Directors of the Company, James A. Coyne, President and Chief Operating Officer of the Company, and certain trusts established for the benefit of Mr. Engle's children. Equis II Corporation was organized in the State of Delaware in 1997 and commenced operations on July 17, 1997. Equis II owns the following Class B interests: AFG Investment Trust A (822,863 interests), AFG Investment Trust B (997,373 interests), AFG Investment Trust C (3,019,220 interests), and AFG Investment Trust D (3,140,683 interests) (collectively, the "Class B Interests"). AFG Investment Trust A owns 20,969 shares of the Company's common stock and has a note receivable from the Company equal to $462,353 that matures in April 2001. Through its ownership of the Class B Interests, Equis II holds approximately 62% of the voting interests in each of the Trusts. However, Mr. Engle has voting control of the Class B Interests pursuant to the terms of a Voting Trust Agreement executed in connection with the Equis II

transaction. Equis II also owns AFG ASIT Corporation, the Managing Trustee of the Trusts. As Managing Trustee of the Trusts, AFG ASIT Corporation has a 1% carried interest in the Trusts and significant influence over the operations of the Trusts. EFG/KIRKWOOD CAPITAL LLC On May 1, 1999, the Company and the Trusts formed EFG/Kirkwood Capital LLC ("EFG/Kirkwood") for the purpose of acquiring preferred and common stock interests in Kirkwood Associates Inc. ("KAI"). EFG/Kirkwood's investment consists of a common stock interest in KAI of approximately 16% as well as preferred stock and convertible debt. The Company purchased a Class B interest in EFG/Kirkwood and the Trusts purchased Class A interests in EFG/Kirkwood. Generally, the Class A Interest holders are entitled to certain preferred returns prior to distributions being paid to the Company, as Class B interest holder. KAI owns a ski resort, a local public utility, and land that is held for development. The resort is located in Kirkwood, California and is approximately 30 miles from South Lake Tahoe, Nevada. Subsequent to making its investment in KAI, EFG/Kirkwood made a 50% investment in Mountain Springs Resorts LLC, an entity formed for the purpose of acquiring an ownership interest in a Colorado ski resort that remains pending. The Company's investment in EFG/Kirkwood had a cost of $750,000. 2

ARISTON CORPORATION On August 31, 1998, the Company executed an agreement to acquire all of the common stock of Ariston Corporation ("Ariston") for a total purchase price of $12,450,000. Ariston is a holding company having two investments: (i) a 99% limited partnership interest in AFG Eireann Limited Partnership ("AFG Eireann"), a Massachusetts limited partnership having a tax interest in a diversified pool of lease contracts owned by an institutional investor and (ii) a 98% limited partnership interest in Old North Capital Limited Partnership ("ONC"), a Massachusetts limited partnership with investments in cash and notes, equipment leases, and limited partnerships that are engaged in either equipment leasing or real estate. The latter includes two commercial buildings located in Washington D.C. and Sydney, Australia that are leased to an investment-grade educational institution. Gary D. Engle, Chairman, Chief Executive Officer and a director of the Company and James A. Coyne, President, Chief Operating Officer and a director of the Company both are affiliated with ONC and Gary D. Engle is affiliated with AFG Eireann. Ariston was organized on July 31, 1998 as a Delaware corporation. On August 3, 1998, EFG contributed its limited partnership interests in AFG Eireann and ONC to Ariston in exchange for Ariston common stock. Ariston was a wholly-owned subsidiary of EFG until its acquisition by the Company and was formed principally to facilitate the transfer of limited partnership interests held by EFG in AFG Eireann and ONC. Gary D. Engle controls EFG and is the sole director of Ariston. The Company purchased all of the common stock of Ariston from EFG for fair value of $12,450,000. The Company's consideration consisted of cash of $2 million and a purchase-money note of $10,450,000. The Ariston acquisition was accounted for under the purchase method of accounting and the balance sheet and statement of operations of Ariston were consolidated effective September 1, 1998. The purchase-money note bears interest at the annualized rate of 7%, payable quarterly in arrears, and requires principal reductions based upon the cash flows generated by the limited partnership interests owned by Ariston. The note matures on August 31, 2003 and is recourse only to the common stock of Ariston. The cost of the Ariston acquisition was allocated on the basis of the estimated fair value of the assets acquired and liabilities assumed. In October 1998, Ariston declared and paid a cash distribution of $2,020,000 to the Company. Until the purchase-money note is retired, future cash distributions by Ariston require the consent of EFG. LIQUIDITY AND CAPITAL RESOURCES The Company's recent investments, described above, were highly leveraged transactions whereby substantially all of the near-term cash flow generated by the underlying assets will be used to service corresponding purchase indebtedness. Accordingly, the Company does not anticipate incremental free cash flow, net of debt service, being generated from these investments until the indebtedness is retired. The Company's cash and cash equivalents balance declined from $7,788,124 at December 31, 1998 to $4,896,554 at December 31, 1999 principally as a result of (i) the Company's $750,000 investment in EFG/Kirkwood (see Note 6); (ii) higher principal payments on debt obligations; (iii) cash paid for interest expense which increased approximately $1.5 million from 1998 to 1999, and (iv) higher operating costs resulting from the Company's recent investment activities. The Company's future near-term liquidity needs will continue to be influenced principally by debt service payments in addition to potential new investments, operating expenses, and development of the Rancho Malibu property. The extent and timing of additional capital investments for the Rancho Malibu project will be dependent upon completion of the permitting and local regulatory approval processes, which remain pending. RESULTS OF OPERATIONS Total income for the year ended December 31, 1999 increased to $1,886,087 from $1,158,216 for the year ended December 31, 1998. This increase reflects higher revenues in 1999 compared to 1998 resulting from the acquisition of Ariston during 1998. Such revenues include the recognition of (i) rental income from two commercial buildings and equipment on operating leases and (ii) interest income from a note receivable from affiliates. The operating results of Ariston were consolidated in the Company's statement of operations effective September 1, 1998. Accordingly, 1999 was the first year the Company recognized a full year's income related to the Ariston acquisition. The increase in total income from 1998 to 1999 was partially offset by a decrease in income from lending and investing activities. This decrease resulted from the recognition of interest income in 1998 related to notes receivable, which were collected during that year.

Total expenses for year ended December 31, 1999 increased to $4,222,981 from $2,618,063 for the year ended December 31, 1998. The increase of $1,604,918 was caused in part by the consolidation of the operating results of Ariston into the Company's statements of operations, effective September 1, 1998. Significant expenses relating to Ariston include (i) interest expense incurred in connection with indebtedness related to its commercial buildings, (ii) depreciation and amortization expense related to the buildings, equipment on operating leases and deferred financing costs, and (iii) operating expenses. As described above, the Company's statement of operations for the year ended December 31, 1998 only includes such expenses incurred subsequent to the Ariston acquisition on August 31, 1998. In addition, the increase in expenses reflects an increase in interest expense related to the Ariston acquisition indebtedness based upon the length of time such indebtedness was outstanding during the respective years. Increases in other professional fees and general and administrative expenses, resulting principally from the Company's recent investment activities, further contributed to the overall increase in total expenses in 1999 compared to 1998. The above changes resulted in an increase in the Company's net loss for the year ended December 31, 1999 to $2,336,894 ($2.01 per share) from $1,459,847 ($1.23 per share) for the year ended December 31, 1998. The net loss per share for the year ended December 31, 1999 is based on the weighted average number of shares outstanding during the year of 1,162,821 as compared to 1,182,810 for the year ended December 31, 1998. 3

REPORT OF INDEPENDENT AUDITORS To the Stockholders of Semele Group Inc. We have audited the accompanying consolidated balance sheets of Semele Group Inc. as of December 31, 1999 and 1998, and the related consolidated statements of operations, stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Semele Group Inc. at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. ERNST & YOUNG LLP Boston, Massachusetts March 30, 2000 4

SEMELE GROUP INC. Consolidated Balance Sheets December 31, 1999 and 1998
1999 ---------------ASSETS Cash and Cash Equivalents.......................................... Rents Receivable................................................... Accounts Receivable - Affiliates................................... Interest Receivable - Affiliates................................... Notes Receivable - Affiliates...................................... Real Estate Held for Development................................... Other Investments.................................................. Special Beneficiary Interests...................................... Investment in Equis II Corporation................................. Investment in Partnerships and Trusts.............................. Land .............................................................. Building, net of accumulated depreciation of $1,175,632 and $820,478 at December 31, 1999 and 1998, respectively............. Other Assets....................................................... $ 4,896,554 95,059 10,160 438,837 2,725,695 10,045,493 750,000 9,608,916 19,586,000 3,534,393 1,929,000 ----$

10,757,365 379,255 ---------------$ 64,756,727 ================

----$ =====

Total Assets....................................................... LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Notes Payable - Affiliates......................................... Notes Payable...................................................... Accrued Interest - Affiliates...................................... Accrued Interest................................................... Accrued Expenses - Affiliates...................................... Accounts Payable and Accrued Expenses.............................. Distributions Payable.............................................. Minority Interest..................................................

44,108,000 6,628,141 118,690 60,680 71,118 1,100,467 52,063 3,780,960 ---------------55,920,119 ----------------

$

$

-----

Total Liabilities..................................................

-----

Stockholders' Equity Shares of Common Stock, $0.01 Par Value, 5,000,000 Authorized, 2,080,185 Shares Issued Accumulated Deficit................................................ Deferred Compensation, 111,811 and 56,883 Shares at December 31, 1999 and 1998, respectively......................... Treasury Stock at Cost, 890,397 and 945,325 Shares at December 31, 1999 and 1998, respectively.........................

170,663,365 (145,617,782) (1,900,780) (14,308,195) ---------------8,836,608 ---------------$ 64,756,727 ================

(

-----

Total

Stockholders' Equity........................................

----$ =====

Total Liabilities and Stockholders' Equity........................ Book Value Per Share of Common Stock (1,189,788 and 1,134,860 Shares Outstanding at December 31, 1999 and 1998, respectively)........................

$ 7.43 ================

$ =====

The accompanying notes are an integral part of the consolidated financial statements. 5

SEMELE GROUP INC. Consolidated Statements of Operations For the years ended December 31, 1999 and 1998
1999 ---------------INCOME Income From Lending and Investing Activities: Interest on Loans Receivable......................................... Income on Investments ............................................... -

-289,257 ---------------289,257 ----------------

$

$ -

Total Income From Lending and Investing Activities.....................

-

Other Income: Rental Income........................................................ Interest on Note Receivable - Affiliates............................. Gain on Sale of Equipment ........................................... Other Income ........................................................

1,187,044 313,455 24,750 71,581 ---------------1,596,830 ---------------1,886,087 ----------------

-

Total Other Income.....................................................

-

Total Income...........................................................

-

EXPENSES Expenses From Property Operating Activities: Net Loss From Operations of Foreclosed Real Estate Held for Sale.....

691,140 ---------------691,140 ----------------

-

Total Expenses From Property Operating Activities......................

-

Other Expenses: Stockholder Expenses ................................................ Directors' Fees, Expenses, and Insurance ............................ Other Professional Fees ............................................. General and Administrative .......................................... Administrative Reimbursement - Affiliate ............................ Interest Expense - Affiliates ....................................... Interest Expense .................................................... Depreciation Expense ................................................ Amortization Expense................................................. Recovery of Losses on Loans, Notes, Advances and Interest Receivable................................................

34,473 180,715 357,910 864,955 153,823 1,292,140 541,055 517,378 23,563 (434,171) ---------------3,531,841 ---------------4,222,981 ---------------$ (2,336,894) ================

-

Total Other Expenses ..................................................

-

Total Expenses ........................................................

$ =

Net Loss ..............................................................

Net Loss Per Share of Common Stock Basic (Based on the Weighted Average Number of Shares Outstanding of 1,162,821 and 1,182,810, respectively)................

$ (2.01) ================

$ =

The accompanying notes are an integral part of the consolidated financial statements. 6

SEMELE GROUP INC. Consolidated Statements of Stockholders' Equity For the years ended December 31, 1999 and 1998
Common Stock -------------------------------------Shares Amount ----------------------------Stockholder's Equity, December 31, 1997................... Deferred Compensation 41,400 Shares of Stock.............. 1-for-300 reverse stock split and 30-for-1 forward stock split (including $356,098 paid for fractional shares).................. Acquisition of 69,223 Shares of Treasury Stock, at Cost............ Net Loss............................ 2,125,327 $ 171,019,463

Accumulated Deficit --------------$ (141,713,131)

--

--

--

(45,142)

(356,098)

--

-----------------

-----------------

-(1,459,847) ---------------

Stockholder's Equity, December 31, 1998.................. Deferred Compensation 54,928 Shares of Stock............. Distributions Declared By Subsidiary......................... Net Loss............................ Stockholder's Equity, December 31, 1999..................

2,080,185

170,663,365

(143,172,978)

--

--

--

----------------2,080,185 =============== Deferred Compensation ---------------

----------------$ 170,663,365 =============== Treasury Stock -------------$ (15,591,003)

(107,910) (2,336,894) --------------$ (145,617,782) ===============

Total --------------$ 13,452,125

Stockholder's Equity, December 31, 1997................... Deferred Compensation 41,400 Shares of Stock.............. 1-for-300 reverse stock split and 30-for-1 forward stock split (including $356,098 paid for fractional shares).................. Acquisition of 69,223 Shares of Treasury Stock, at Cost............ Net Loss............................

$

(263,204)

(703,800)

703,800

--

--

--

(356,098)

-----------------

(354,768) ---------------

(354,768) (1,459,847) ---------------

Stockholder's Equity, December 31, 1998.................. Deferred Compensation 54,928 Shares of Stock............. Distributions Declared By Subsidiary......................... Net Loss............................

(967,004)

(15,241,971)

11,281,412

(933,776)

933,776

--

-----------------

----------------

(107,910) (2,336,894) ---------------

Stockholder's Equity, December 31, 1999..................

$ (1,900,780) ===============

$ (14,308,195) ==============

$ 8,836,608 ===============

The accompanying notes are an integral part of the consolidated financial statements. 7

SEMELE GROUP INC. Consolidated Statements of Cash Flows For the years ended December 31, 1999 and 1998
1999 --------------CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss....................................................................... Adjustments to Reconcile Net Loss to Net Cash Provided By (Used In) Operating Activities: Depreciation and Amortization Expense........................................ Minority Interest............................................................ Net Change In: Interest Receivable on Loans................................................. Rents Receivable............................................................. Accounts Receivable - Affiliates............................................. Interest Receivable - Affiliates............................................. Other Receivables............................................................ Other Assets................................................................. Accrued Interest - Affiliates................................................ Accrued Interest............................................................. Accrued Expenses - Affiliates................................................ Accounts Payable and Accrued Expenses........................................ Distributions Payable........................................................ $ (2,336,894)

540,941 58,829 -(4,021) (3,508) (313,455) -(21,279) (125,143) (6,979) -247,278 3,188 --------------(1,961,043) ---------------

Net Cash Provided By (Used In) Operating Activities............................

CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of Ariston Corporation........................................... Real Estate Held for Development............................................. Collection of Loans Receivable............................................... Investment in Partnerships and Trusts........................................ Special Beneficiary Distribution............................................. Other Investments............................................................

-(83,502) -350,362 43,584 (750,000) --------------(439,556) ---------------

Net Cash Provided By (Used In) Investing Activities............................

CASH FLOWS FROM FINANCING ACTIVITIES: Principal Payments on Notes Payable.......................................... Distributions Paid by Investee............................................... Payment for Fractional Shares as a Result of Reverse Stock Split............. Acquisition of Treasury Stock................................................

(383,061) (107,910) ----------------(490,971) --------------(2,891,570) 7,788,124 --------------$ 4,896,554 ==============

Net Cash Used In Financing Activities..........................................

Net Decrease in Cash and Cash Equivalents...................................... Cash and Cash Equivalents at Beginning of Year.................................

Cash and Cash Equivalents at End of Year.......................................

Supplemental disclosure of cash flow information: Cash paid during the year for interest.......................................

$ 1,965,317 ==============

Supplemental disclosure of non-cash activity: See Note 5 to the consolidated financial statements The accompanying notes are an integral part of the consolidated financial statements. 8

SEMELE GROUP INC. Notes to the Consolidated Financial Statements December 31, 1999 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION Semele Group Inc. (the "Company"), formerly known as Banyan Strategic Land Fund II, was organized as a corporation under the laws of the State of Delaware, pursuant to the Certificate of Incorporation filed April 14, 1987. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and consolidated ventures which hold title to the Company's property. In August 1998, the Company acquired Ariston Corporation ("Ariston"), the results of which are consolidated in the Company's financial statements, effective September 1, 1998. All intercompany balances and transactions have been eliminated in consolidation. On December 22, 1999, the Company acquired an 85% equity interest in Equis II Corporation. In connection with this investment, the Company acquired a Special Beneficiary interest in four Delaware Business Trusts. The Company accounts for both investments using the equity method of accounting (See Note5). The Company's investment in partnerships and trusts consists of limited partner or beneficiary interests that represent less than a 20% ownership interest in the investees and are accounted for using the cost method. REVENUE RECOGNITION Interest income is accrued when earned. The accrual of interest is discontinued when the borrower acknowledges its inability to make payments or when payments become contractually delinquent ninety days or more, unless the loan is in the process of collection. Once a loan has been placed in a non-accrual status, all cash received is applied against the outstanding loan balance until such time as the borrower has demonstrated an ability to make payments under the terms of the then current loan agreement. Rental income from operating leases is recognized on a straight-line basis over the life of the lease agreements. REAL ESTATE HELD FOR DEVELOPMENT At December 31, 1999, foreclosed real estate held for sale was reclassified as real estate held for development, at its former basis. INCOME TAXES Income taxes are accounted for in accordance with Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes". Tax provisions are made based upon earnings reported for financial statement purposes and includes deferred taxes for the effects of timing differences between financial accounting and taxable earnings. Reserves are recorded against deferred tax assets in accordance with FAS 109. CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. INVESTMENTS IN REAL ESTATE PROPERTY Investments in real estate property, consisting of buildings and land, are recorded at cost. Impairment losses on investments are recognized where indicators of impairment are present and the undiscounted cash flows (net realizable value) estimated to be generated by the Company's investments is less than the carrying amount of such investments. The determination of net realizable value includes consideration of many factors including income to

be earned from the investment, holding costs (exclusive of interest), estimated selling prices, and prevailing economic and market conditions. 9

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) DEPRECIATION AND AMORTIZATION Depreciation is computed using the straight-line depreciation method over the estimated useful lives of the related assets (2 years for equipment on operating leases and 27.5 and 40 years for buildings). Depreciation expense was $517,378 and $251,815 during the year ended December 31, 1999 and 1998, respectively. Amortization is computed using the straight-line depreciation method over the estimated useful lives of the related intangible assets. VALUATION OF STOCK OPTIONS The Company's Stock Options awarded pursuant to its 1994 Directors and Executive Option Plans are accounted for in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. MINORITY INTEREST Ariston owns approximately 51% of a real estate investment program that is consolidated in the Company's financial statements. The outside investors' interest in this investment is reflected on the accompanying consolidated balance sheets as minority interest and its share of the respective income is included in general and administrative expenses on the accompanying consolidated statements of operations. Additionally, Ariston's investments include a 98% interest in Old North Capital Limited Partnership ("ONC"). The remaining 2% interest has been recorded as a minority interest adjustment. 2. OTHER ASSETS Other assets principally include equipment on operating lease and deferred financing costs, both of which pertain to Ariston. The deferred financing costs are being amortized over the life of the loan to which they pertain and equipment on operating leases is being depreciated using the straight-line method over the equipment's remaining estimated useful life. Rental income and interest expense associated with equipment on operating leases are recognized as earned and incurred, respectively. Future minimum rents of $68,673 are due in the year ending December 31, 2000 in connection with equipment on operating leases. In addition, the Company, through its consolidation of Ariston, has an interest in future rental income from leasing two commercial buildings to an investment-grade educational institution. Future minimum lease payments pertaining to these contracts are as follows:
For the year ending December 31, 2000 2001 2002 2003 $ 911,455 1,150,504 1,084,962 91,000 -----------

Total

$ 3,237,921 ===========

10

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) 3. NOTES PAYABLE Through its acquisition of Ariston, the Company acquired a limited partnership interest in a real estate investment program and assumed related indebtedness. The note bears a fluctuating interest rate based on prime plus a margin and requires quarterly payments of principal and interest. The outstanding balance of this indebtedness was $757,510 at December 31, 1999. The note matures on January 15, 2003 and is secured by the associated limited partnership interest. Repayment of the debt is partially guaranteed by Messrs. Engle and Coyne. In addition, the Company has consolidated additional indebtedness pertaining to a commercial property leased to an investment-grade educational institution. The interest rate on this debt is fixed at 7.86%. The outstanding balance of this indebtedness was $5,740,267 at December 31, 1999. The Company has non-recourse debt, consisting of installment notes that are collateralized by certain equipment held on operating leases. The installment notes will be repaid fully by non-cancelable rents generated by the associated lease agreements. At December 31, 1999, the interest rate on these obligations was 7.1%. The annual maturities of the notes payable are as follows:
For the year ending December 31, 2000 2001 2002 2003 2004 Thereafter $ 463,094 546,610 593,785 642,648 458,357 3,923,647 -----------

Total

$ 6,628,141 ===========

The carrying amount of notes payable approximates fair value at December 31, 1999. 4. REAL ESTATE HELD FOR DEVELOPMENT Rancho Malibu is a 274-acre parcel of undeveloped land north of Malibu, California ("Project"). On July 1, 1992, a joint venture (the "Venture") between the Company 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 Company 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. Commencing in 1992, the Venture was engaged in zoning and entitlement activities that have been opposed by the City of Malibu and various citizen groups. The city and a neighboring homeowners association initiated several legal actions intended to preclude the development of the property, all of which were ultimately resolved in favor of the Venture or settled during 1998. The Venture currently is entitled to develop a 46 unit housing community on approximately 40 acres of the property. The remaining 234 acres will be allocated as follows: (i) 167 acres will be dedicated to a public agency, (ii) approximately 47 acres will be deed restricted within privately owned lots and (iii) approximately 20 acres will be preserved as private open space. During the year ended December 31, 1999, the Venture incurred approximately $691,000 of costs in connection with Rancho Malibu. The expenses are primarily related to the Venture's efforts to successfully satisfy a number of complex requirements imposed by various state, local and federal entities in order to commence development. These costs were included in total expenses from property operating activities on the Company's consolidated statements of operations. The Venture capitalized $83,502 of costs for transfer development credits during the year ended December 31, 1999. At December 31, 1999, the Company's carrying balance for the property was $10,045,493.

11

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) 5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES ACQUISITION OF EQUIS II CORPORATION AND SPECIAL BENEFICIARY INTERESTS On December 22, 1999, the Company acquired an 85% equity interest in Equis II Corporation ("Equis II") that the Company financed by issuing purchase-money notes totaling $19,586,000 to the selling Equis II stockholders. In connection with this investment, the Company also acquired a Special Beneficiary interest in four Delaware Business Trusts known as AFG Investment Trust A, AFG Investment Trust B, AFG Investment Trust C, and AFG Investment Trust D (collectively, the "Trusts") for $9,652,500 that the Company financed by issuing a non-recourse purchase-money note. The Trusts are engaged principally in the business of equipment leasing. In recent years, they each have made additional investments in certain real estate projects, including a Class A interest in EFG/Kirkwood Capital LLC. The Company owns a Class B interest in EFG/Kirkwood Capital LLC that it acquired in 1999. (See "Investment in EFG/Kirkwood Capital LLC" below.) In addition, a subsidiary of the Company serves as general partner to a real estate development project in which Trusts C and D are partial investors. Equis II Corporation The stockholders of Equis II from whom the Company acquired 85% of Equis II are Gary D. Engle, President, Chief Executive Officer and Chairman of the Board of Directors of the Company, James A. Coyne, President and Chief Operating Officer of the Company, and certain trusts established for the benefit of Mr. Engle's children. Equis II was organized in the State of Delaware in 1997 and commenced operations on July 17, 1997. Equis II owns the following Class B interests: AFG Investment Trust A (822,863 interests), AFG Investment Trust B (997,373 interests), AFG Investment Trust C (3,019,220 interests), and AFG Investment Trust D (3,140,683 interests) (collectively, the "Class B Interests"). AFG Investment Trust A owns 20,969 shares of the Company's common stock and has a note receivable from the Company equal to $462,353 that matures in April 2001. Through its ownership of the Class B Interests, Equis II holds approximately 62% of the voting interests in each of the Trusts. Notwithstanding the foregoing, Mr. Engle has voting control of the Class B Interests pursuant to the terms of a Voting Trust Agreement executed in connection with the Equis II transaction. Equis II also owns AFG ASIT Corporation, the Managing Trustee of the Trusts. As Managing Trustee of the Trusts, AFG ASIT Corporation has a 1% carried interest in the Trusts and significant influence over the operations of the Trusts. In connection with the purchase, the Company entered into a put and call agreement with Messrs. Engle and Coyne and the Engle family trusts, which gives the Company a call right to purchase from these Equis II stockholders, and gives these Equis II stockholders a put right to sell to the Company, the 15% of Equis II that Messrs. Engle and Coyne and the Engle family trusts continue to own. A special committee of the Board of Directors of the Company, consisting of Messrs. Auch, Bartlett and Ungerleider, the Company's independent directors, unanimously approved the purchase by the Company of 85% of Equis II and the entering into of the put and call agreement to purchase the remaining 15% balance. The Company's investment in Equis II is accounted for on the equity method. Under the equity method of accounting, the Company's investment is (i) increased (decreased) to reflect the Company's share of income (loss) of the investee and (ii) decreased to reflect any dividends the Company received from the investee. The cost of the Company's investment in Equis II was based on the estimated discounted future cash flows of Equis II. At December 31, 1999, the carrying value of the Company's investment in Equis II was $19,586,000. The amount of the Company's underlying equity in the net assets of Equis II at that date was approximately $2,239,000. The difference between the carrying value and the underlying equity in the net assets of Equis II will be amortized over six years. The unaudited summarized consolidated balance sheets of Equis II at December 31, 1999 and 1998 (which include the Trusts) are as follows:
1999 199

Total assets .............................................................. Total liabilities ......................................................... Minority interest ......................................................... Total stockholders' equity (deficit) ...................................... Total liabilities, minority interest & stockholders' equity ...............

--------$ 164,905,387 100,082,219 62,189,246 2,633,922 $ 164,905,387

---$ 177,5 100,0 78,0 (5 $ 177,5

The unaudited summarized consolidated statements of operations of Equis II for the years ended December 31, 1999 and 1998 are as follows:
1999 --------$ 38,137,562 26,634,573 8,322,774 34,957,347 $ 3,180,215 1998 --------$ 44,263,740 38,180,597 7,286,173 45,466,770 $ (1,203,030)

Total income ....................................... Total operating expenses ........................... Minority interest .................................. Total expenses ..................................... Net income (loss) ..................................

Special Beneficiary Interests The Special Beneficiary interests were purchased from an affiliate, Equis Financial Group Limited Partnership ("EFG"), for $9,652,500 and represent an 8.25% non-voting, carried interest in each of the Trusts. The Special Beneficiary interests were purchased with a non-recourse note having a 10 year term that bears interest at 7% per year. Interest and principal payments are required to be paid only out of and to the extent of cash distributions paid to the Company on account of the Special Beneficiary interests. The Company accounts for its investment in the Special Beneficiary interests on the equity method, as described above. Equis II Corporation - Transaction Terms and Source of Funds The Company purchased 85% of the common stock of Equis II by delivering promissory notes to the selling Equis II stockholders having a total principal value of $19,586,000. In connection with the acquisition, Messrs. Engle and Coyne delivered back to the Company, and the Company canceled, the options that each of them held to purchase 40,000 shares of Common Stock of the Company at an exercise price of $9.25 per share that were 12

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) granted to them on December 30, 1997. A portion of the notes, having an aggregate principal amount of $14,600,000, mature on October 31, 2005, and bear interest at the annual rate of 7%, of which 3% is due and payable on a current quarterly basis and 4% accrues to the maturity date. Principal payments of $3,600,000, $4,000,000, $4,000,000 and $3,000,000 are due and payable on May 31, 2000, October 31, 2002, May 31, 2003, and the maturity date, respectively. The $14,600,000 of notes are prepayable without penalty. The balance of the promissory notes issued to the Equis II stockholders in connection with the purchase of 85% of Equis II, which have a total principal value of $4,986,000, have terms identical to the terms of promissory notes payable by Messrs. Engle and Coyne to Equis II ($1,901,000) and to Old North Capital Limited Partnership ($3,085,000). (The Company, through its subsidiary Ariston Corporation, has a 98% limited partnership interest in Old North Capital Limited Partnership.) Therefore, the Company is effectively the payee of notes and accrued interest from Messrs. Engle and Coyne of $4,986,000, and it is the payor of notes to Messrs. Engle and Coyne and the Engle family trusts in the same amount. Of the $4,986,000 of promissory notes issued by the Company to the selling Equis II stockholders, promissory notes having a total principal value of $1,901,000 have terms identical to promissory notes payable to Equis II from Messrs. Engle ($1,260,997) and Coyne ($640,003). These notes bear interest at the annual rate of 7.5% payable quarterly, and all outstanding principal and interest is due on August 8, 2007. The $3,085,000 balance of the promissory notes issued by the Company to the selling Equis II stockholders have terms identical to a promissory note payable to Old North Capital Limited Partnership by Messrs. Engle ($2,046,383) and Coyne ($1,038,617), which bears interest at the annual rate of 11.5% and is payable on demand. The Company intends to make the payments on the $4,986,000 of promissory notes from the proceeds of payments made by Messrs. Engle and Coyne on their indebtedness to Equis II and Old North Capital Limited Partnership. If either individual fails to make timely payments, the Company will be relieved of its obligations on the $4,986,000 of notes until the default is cured. The $19,586,000 of promissory notes are general obligations of the Company secured by a pledge to the selling Equis II stockholders of the shares of Equis II owned by the Company. At December 31, 1999, this pledge was junior to a prior pledge of such shares to a third-party financial institution to secure indebtedness of $18,962,000 owed by Equis II to that institution. The pledge became a first priority pledge upon the repayment of the institutional indebtedness of Equis II in January 2000 (See Note 15 - Subsequent Events). In the case of the $14,600,000 of promissory notes, those notes issued to Mr. Engle and to the Engle family trusts become immediately due and payable if Mr. Engle ceases to be the Chief Executive Officer and a director of the Company, except if he resigns voluntarily or is terminated for cause, and those notes issued to Mr. Coyne become immediately due and payable if Mr. Coyne ceases to be the President and a director of the Company, except if he resigns voluntarily or is terminated for cause, as cause is defined in the executives' employment agreements with the Company. The Company may in the future purchase the remaining 15% of the outstanding shares of common stock of Equis II that it does not currently own by issuing 510,000 shares of common stock of the Company to the selling Equis II stockholders in payment for the 15% balance, but only if stockholder approval for payment in shares is obtained. If stockholder approval is not obtained before December 31, 2000, the put and call agreement with respect to the purchase of the 15% balance will terminate. (See Note 15 - Subsequent Events.) ACQUISITION OF ARISTON CORPORATION On August 31, 1998, the Company executed an agreement to acquire all of the common stock of Ariston for a total purchase price of $12,450,000. Ariston is a holding company having two investments: (i) a 99% limited partnership interest in AFG Eireann Limited Partnership ("AFG Eireann"), a Massachusetts limited partnership having a tax interest in a diversified pool of lease contracts owned by an institutional investor and (ii) a 98% limited partnership interest in Old North Capital Limited Partnership ("ONC"), a Massachusetts limited partnership with investments in cash and notes, equipment leases, and limited partnerships that are engaged in either equipment leasing or real estate. The latter includes two commercial buildings located in Washington D.C. and Sydney, Australia that are leased to an investment-grade educational institution. Gary D. Engle, Chairman, Chief Executive Officer and a director of the Company and James A. Coyne, President, Chief Operating Officer

and a director of the Company both are affiliated with ONC and Gary D. Engle is affiliated with AFG Eireann. Ariston was organized on July 31, 1998 as a Delaware corporation. On August 3, 1998, EFG contributed its limited partnership interests in AFG Eireann and ONC to Ariston in exchange for Ariston common stock. Ariston was a wholly-owned subsidiary of EFG until its acquisition by the Company and was formed principally to facilitate the transfer of limited partnership interests held by EFG in AFG Eireann and ONC. Gary D. Engle controls EFG and is the sole director of Ariston. The Company purchased all of the common stock of Ariston from EFG for fair value of $12,450,000. The Company's consideration consisted of cash of $2 million and a purchase-money note of $10,450,000. The Ariston acquisition was accounted for under the purchase method of accounting and the balance sheet and statement of operations of Ariston were consolidated effective September 1, 1998. The purchase-money note bears interest at the annualized rate of 7%, payable quarterly in arrears, and requires principal reductions based upon the cash flows generated by the limited partnership interests owned by Ariston. The note matures on August 31, 2003 and is recourse only to the common stock of Ariston. The cost of the Ariston acquisition was allocated on the basis of the estimated fair value of the assets acquired and liabilities assumed. In October 1998, Ariston declared and paid a cash distribution of $2,020,000 to the Company. Until the purchase-money note is retired, future cash distributions by Ariston require the consent of EFG. 13

The following summarized, unaudited pro forma results of operations for the year ended December 31, 1998 assumes that the Company effected the acquisition at the beginning of 1998:
Revenue and Other Income ............................ Net Income .......................................... Net Income Per Share of Common Stock Basic .......... $ 6,808,297 $ 3,616,802 $ 3.06

The combined pro forma results of operations include activities that were not ongoing as of the date of the Ariston purchase. INDEBTEDNESS The Company obtained a loan of $4,419,500 from certain affiliates in 1997. The loan bears interest at an annualized rate of 10% and provides for mandatory principal reductions, if and to the extent the Company realizes any net cash proceeds from the sale or refinancing of its Rancho Malibu property. The loan, which was to mature on April 30, 2000, was extended to April 30, 2001. During each of the years ended December 31, 1999 and 1998, the Company incurred interest expense of $441,950 in connection with this indebtedness. At December 31, 1999, the carrying value of the note approximates its estimated fair value. ADMINISTRATIVE SERVICES The Company's administrative functions are performed by an affiliate, EFG, pursuant to an Administrative Services Agreement between the Company and EFG dated May 7, 1997. EFG is reimbursed at actual cost for expenses it incurs on the Company's behalf. Administrative expenses consist primarily of professional and clerical salaries and certain rental expenses. The Company incurred total administrative costs of $153,823 and $152,201 during the years ended December 31, 1999 and 1998, respectively. 6. OTHER INVESTMENTS On May 1, 1999, the Company and the Trusts formed EFG/Kirkwood Capital LLC ("EFG/Kirkwood") for the purpose of acquiring preferred and common stock interests in Kirkwood Associates Inc. ("KAI"). EFG/Kirkwood's investment consists of a common stock interest in KAI of approximately 16% as well as preferred stock and convertible debt. The Company purchased a Class B interest in EFG/Kirkwood and the Trusts purchased Class A interests in EFG/Kirkwood. Generally, the Class A Interest holders are entitled to certain preferred returns prior to distributions being paid to the Company, as Class B interest holder. KAI owns a ski resort, a local public utility, and land that is held for development. The resort is located in Kirkwood, California and is approximately 30 miles from South Lake Tahoe, Nevada. Subsequent to making its investment in KAI, EFG/Kirkwood made a 50% investment in Mountain Springs Resorts LLC, an entity formed for the purpose of acquiring an ownership interest in a Colorado ski resort that remains pending. The Company's investment in EFG/Kirkwood had a cost of $750,000. 7. RECOVERY OF LOSSES ON LOANS, NOTES, ADVANCES AND INTEREST RECEIVABLE During 1998, the Company received cash distributions of $18,423 related to its interest in a liquidating trust established for the benefit of the unsecured creditors (including the Company) of VMS Realty Partners and its affiliates. In addition, the Company received $89,753 from its interest in Springtown Partners, a California limited partnership formed by three land owners, including the Company, for the purpose of merging land parcels in order to option them to a third party for use as a wetland mitigation bank. The Company acquired the land from Anden Group as a result of a loan default, but fully reserved for the asset as the land was determined to be "undevelopable" due to certain environmental issues. Since 1993, the Company has sought to realize value from this asset. The Company has classified both of the above-referenced amounts as a recovery of amounts previously charged to losses on loans, notes, advances and interest receivable on its consolidated statement of operations for the year ended December 31, 1998. During 1994, in connection with the restructuring of Anden, the Company was conveyed an interest in a first mortgage loan collateralized by a parcel of land located in Hemet, California. The borrower was Hemet Phase IV

Partners, L.P. ("Hemet"). The Company also was conveyed a limited partnership interest in Hemet. The Company recorded its interest in the loan at $500,000 at the date of foreclosure. During 1994, the Company recorded a 14

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) provision for losses on loans, notes, advances and interest receivable relating to the Hemet loan in the amount of $275,000. Pursuant to the Company's valuation of the underlying collateral, the loan was placed on non-accrual status. On October 8, 1998, the Company received $744,795 as payment in full on the loan and interest. The Company recorded $225,000 as a principal repayment, $275,000 as a recovery of amounts previously charged to losses on loans, notes, advances and interest receivable and the remainder as interest income. During 1999, the Company received $434,171 representing a liquidating distribution related to its limited partnership interest in Hemet. The Company has treated such amount as a recovery of amounts previously charged to losses on loans, notes, advances and interest receivable on its consolidated statement of operations for the year ended December 31, 1999. 8. EXECUTIVE AND DIRECTOR STOCK OPTION PLAN On June 30, 1994, the stockholders approved and adopted the 1994 Executive and Directors Stock Option Plan (the "Plan"). As originally adopted, the Plan authorized the grant of non-statutory stock options only. On December 30, 1997, the Board of Directors of the Company adopted an amendment to the Plan to permit the grant of incentive stock options within the meaning of Section 422 of the Internal Revenue Code. The stockholders approved the Amendment to the Plan at the 1997 Annual Meeting of Stockholders. The Plan granted the Board of Directors the authority to issue up to 100,000 shares of the Company's common stock for stock option awards. The Plan consists of an Executive Option Grant Program and a Director Option Grant Program. Under the Director Option Grant Program, each of the Directors, in consideration of their length of service on the Board, received an option to acquire 5,000 shares. The exercise price of the options initially granted to the Board of Directors on July 15, 1994 under the Director Option Grant Program was $11.25. The exercise price was reduced to $9.25 by a vote of the Board of Directors on December 30, 1997. No executive is eligible to receive options under the Director Option Grant Program. The Board administers the Executive Option Grant Program and has the authority to determine, among other things, the individuals to be granted Executive Options, the exercise price at which shares may be acquired, the number of shares subject to option and the exercise period of each option. The Board is also authorized to construe and interpret the Executive Option Grant Program and to prescribe additional terms and conditions of exercise in option agreements and provide the form of option agreement to be utilized with the Executive Option Grant Program. No Director is eligible to receive options under the Executive Option Grant Program. Pursuant to the terms of the grants, options for all shares granted under the Executive Option Grant Program are exercisable and vested in installments as follows: (i) 33.3% of the number of shares commencing on the first anniversary of the date of grant; (ii) an additional 33.3% of the shares commencing on the second anniversary of the date of the grant; and (iii) an additional 33.4% of shares commencing on the third anniversary of the date of grant. Options for all shares as granted under the Director Option Grant Program are exercisable in installments as follows: (i) 50.0% of the number of shares commencing on the first anniversary of the date of grant; and (ii) an additional 50.0% of the number of shares commencing on the second anniversary of the date of grant. The Board is granted discretion to determine the term of each option granted under the Executive Option Grant Program, but in no event will the term exceed ten years and one day from the date of grant. During 1998, unexercised stock options issued to a former Director, Mr. Nudo under the Director Option Grant Program were canceled and surrendered in connection with his resignation. Mr. Nudo was paid $20,000 by the Company as consideration for his options. On December 30, 1997, the Board voted to grant nonstatutory stock options for 5,000 shares at an exercise price of $9.25 per share to Joseph W. Bartlett under the Director Option Grant Program and incentive stock options for 40,000 shares at an exercise price of $9.25 per share to each of Gary D. Engle and James A. Coyne under the Executive Option Grant Program. These grants were approved by the stockholders at the 1997 Annual Meeting held on June 30, 1998. The closing price for a share of the Company's Common Stock as reported by NASDAQ was $6.25 and $8.125 at

15

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) December 30, 1997 and June 30, 1998, respectively. On December 22, 1999 the incentive options granted to Gary D. Engle and James A. Coyne were canceled in connection with the Equis II transaction (see Note 5). SFAS No. 123 "Accounting for Stock-Based Compensation," became effective for 1996. This statement addresses accounting and reporting standards for stock-based employee compensation plans. The Company has elected to continue to recognize compensation expense using the intrinsic value-based method of accounting prescribed by APB Opinion No. 25. Proforma information regarding net income and earnings per share is required by SFAS 123. Proforma disclosures must include all stock-based compensation grants made in fiscal years that begin after December 15, 1994. Proforma results of net income and earnings per share using the fair value method for accounting for stock-based employer compensation plans for the year ended December 31, 1999 and 1998 are not presented, as results differ by two or less percent from those reported. For purposes of estimating the fair value of the Company's employee stock options at the grant date, a BlackScholes option pricing model was used with the following weighted average assumptions: risk-free interest rate of 5.88% and 6.01% in 1999 and 1998, respectively; dividend yield of 0% during both 1999 and 1998; and volatility factors of the expected market price of the Company's common stock of .474 during both 1999 and 1998. The weighted average life of the stock options was 2 and 2.5 years as of December 31, 1999 and 1998, respectively. For purposes of the proforma calculation, the estimated fair value of the options was amortized to expense over the options vesting period. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of options. The effects on 1999 and 1998 pro forma net income and pro forma basic earnings per common share and common share equivalent of amortizing to expense the estimated fair value of stock options are not necessarily representative of the effects on net income to be reported in future years due to such things as the vesting period of the stock options, and the potential for issuance of additional stock options in future years. A summary of the Company's stock option activity, and related information for the years ended December 31, 1999 and 1998 is as follows: 16

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued)
Weighted Average Exercise Price Per Share ------------------9.25 9.25 9.25 ------------------9.25 9.25 ------------------$ 9.25 ===================

Balance at January 1, 1998...... Options granted.............. Options canceled............. Balance at December 31, 1998.... Options canceled............. Balance at December 31, 1999

Shares Subject to Option -----------------15,000 85,000 (5,000) -----------------95,000 (80,000) -----------------15,000 ==================

At December 31, 1999, options on 15,000 shares were exercisable. The exercise price of these options was $9.25 per share. 9. DEFERRED COMPENSATION The Company established an incentive compensation plan (the "Plan") for certain executives (the "Participants"). The Plan provides for all or some of the Participants' salary to be deferred. All such deferred compensation is held subject to the claims of creditors of the Company in a "rabbi" trust until paid to the Participants following the Participants' termination of employment. The amounts deferred are invested in common stock of the Company. Pursuant to the Plan, the Participants deferred $240,000 of compensation during each of the years ended December 31, 1999 and 1998 which represented 54,928 and 41,400 shares of common stock, respectively. The deferred amounts were expensed by the Company during 1999 and 1998 and are included in general and administrative expenses on the consolidated statements of operations for the years ended December 31, 1999 and 1998. 10. STOCK SPLITS Effective June 30, 1998, the stockholders approved a 1-for-300 reverse stock split followed by a 30-for-1 forward stock split. As a result of the reverse stock split, each stockholder of record who owned less than 300 shares of common stock immediately prior to the reverse stock split received in lieu of the fractional share resulting from the reverse split, cash in the amount of $.790625 per share (the average daily closing price per share of common stock on the NASDAQ Stock Exchange for the ten trading days prior to effective date) multiplied by the number of shares of common stock owned by such stockholder immediately prior to the reverse stock split. Immediately after the reverse stock split, the number of shares of common stock of each holder (excluding stockholders who held less than 300 shares immediately prior to the reverse split) was converted in a forward split into multiple shares of common stock on the basis of 30 shares of common stock for each share or fraction thereof then held. The Company paid $356,098 to fractional stockholders on July 17, 1998 as a result of the reverse stock split. All share and per share data for prior periods presented have been restated to reflect the stock splits. 11. TREASURY STOCK On September 23, 1998, the Company purchased 69,223 shares of common stock, or approximately 6.1% of the Company's common stock outstanding. The Company paid cash in the amount of $5 1/8 per share, for a total purchase price of $354,768. 12. NASDAQ SMALLCAP MARKET STOCK LISTING On February 23, 1998, new requirements for continued inclusion on the NASDAQ National Market system became effective. The Company had not consistently met the new bid price criteria for continued listing based on

the Company's stock price. Effective January 8, 1999, the Company began trading on the NASDAQ SmallCap system. 13. INCOME TAXES Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes. Deferred income taxes consist of the following at December 31, 1999 and 1998:
1999 --------------Deferred tax assets: Mortgage loans in substantive foreclosure Foreclosed real estate held for sale, net Investment in real estate venture Net operating loss carry forwards Sub-total Less valuation allowance for deferred tax assets Total deferred tax assets Deferred tax liabilities Net deferred tax assets 2,327,000 1,195,000 40,000 30,035,000 --------------33,597,000 (33,597,000) ------------------------------$ -================ $ 1998 ------------2,327,0 1,195,0 40,0 30,035,0 ------------33,597,0 (33,597,0 ------------$

------------$ =============

17

SEMELE GROUP INC. Notes to the Consolidated Financial Statements (Continued) Appendix E As of December 31, 1999, the Company had net operating loss carry forwards of approximately $83,995,000 which expire as follows: $18,817,000 in 2005; $47,337,000 in 2006; $281,000 in 2007; $2,981,000 in 2008; $4,086,000 in 2009; $1,265,000 in 2010; $2,028,000 in 2011 and $7,200,000 in 2012. 14. LITIGATION On June 16, 1994, Coastal Group, Inc. brought an action against Westholme Partners, (an entity in which the Company 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 Company); 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 #943010. The case involves a real estate development 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 was substantially reduced by favorable rulings, entered October 3, 1996, on various motions to dismiss whereby ten of plaintiffs' sixteen counts were dismissed and another count was limited in scope. The reduced complaint alleged breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, fraudulent transfer and also sought relief under a theory of promissory estoppel and requested the creation of a constructive trust for the benefit of plaintiff. The case arose from a failed development and a subsequent foreclosure filed by defendant CINB. The plaintiff alleged, among other things, that CINB and BMC Westholme 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. A motion for summary judgment was filed by CINB. The Company joined in that motion. On December 15, 1998 the Court granted summary judgments in favor of BMC Westholme Corporation on all remaining counts of the complaint and also granted BMC Westholme's motions for reimbursement of certain attorney's fees and costs. On January 21, 1999 the same Court awarded the sum of $15,178 to BMC Westholme in consideration of attorney's fees and expenses. The Court's order of December 15, 1998, which granted summary judgment in favor of BMC Westholme has been appealed by Coastal Group, Inc. All necessary briefs have been filed and the parties are awaiting the setting of argument and the rendering of a decision. However, none of the issues on appeal pertain to BMC Westholme. Accordingly, Management does not believe that the resolution of the appeal will have a material adverse effect on the Company's financial position or results of operations. 15. SUBSEQUENT EVENTS On January 20, 2000, Equis II repaid in full indebtedness of $18,962,000 plus interest to a third-party financial institution. As a result, promissory notes totaling $19,586,000 issued to the selling Equis II stockholders, are now secured by a first priority pledge of the shares of Equis II owned by the Company. On January 26, 2000, the Company paid $3,102,000 of principal and accrued interest in partial payment of the promissory note issued by the Company to EFG to acquire the Special Beneficiary Interests in the Trusts. On January 26, 2000, Messrs. Engle and Coyne paid principal and accrued interest of $1,382,649 and $699,653, respectively, to Old North Capital Limited Partnership in partial payment of their respective notes to Old North Capital Limited Partnership, which is majority owned by Ariston. On the same date the Company

paid principal and accrued interest to Messrs. Engle and Coyne of $1,382,649 and $699,653, respectively, in partial payment of the notes issued to them by the Company in connection with the Equis II transaction. On March 6, 2000, the Company obtained shareholder approval for the issuance of 510,000 shares of common stock to purchase the remaining 15% interest of Equis II described in Note 5. The selling Equis II shareholders (Gary D. Engle, James A. Coyne and the Engle Family Trusts) have informed the Company that they plan to exercise their rights to put their remaining 15% ownership interests in Equis II to the Company in exchange for 510,000 shares of the Company's common stock. 18

EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in this Annual Report (Form 10-KSB) of Semele Group Inc. of our report dated March 30, 2000, included in the 1999 Annual Report to stockholders of Semele Group Inc. ERNST & YOUNG LLP Boston, Massachusetts March 30, 2000

ARTICLE 5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEMELE GROUP INC.'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

12 MOS DEC 31 1999 DEC 31 1999 4,896,554 0 3,269,751 0 0 5,001,773 23,731,858 0 64,756,727 1,331,900 50,736,141 8,836,605 0 0 0 64,756,727 0 1,886,087 0 0 4,222,981 0 0 (2,336,894) 0 (2,336,864) 0 0 0 (2,336,894) (2.01) (2.01)


								
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