UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
CityplaceWashington, StateD.C. 20004
FORM 10-K/A
AMENDMENT NO.1
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2005
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934
Commission File Number 1-13237
CHARTERMAC
(Exact name of Registrant as specified in its Trust Agreement)
DELAWARE 13-3949418
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
625 MADISON AVENUE, NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 317-5700
Securities registered pursuant to Section 12(b) of the Act:
SHARES OF BENEFICIAL INTEREST
Name of each exchange on which registered:
NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes[X] No [ ]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the
Exchange Act). Large Accelerated filer [X] Accelerated filer [ ] Non-accelerated
filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of common equity held by non-affiliates of the
registrant as of June 30, 2005 was approximately $1,108,635,000.
As of February 28, 2006 there were 52,018,956 outstanding shares of the
registrant's shares of beneficial interest.
DOCUMENTS INCORPORATED BY REFERENCE
Part III: Those portions of the registrant's Proxy Statement for the Annual
Meeting to be held in June 2006 which are incorporated into Items 10, 11, 12 and
13.
EXPLANATORY NOTE
This amendment to the Annual Report on Form 10-K/A for the year ended December
31, 2005, of CharterMac ("the Company") is being filed to amend and restate Item
9A to clarify management's conclusion that the Company's Disclosure Controls and
Procedures were effective as of December 31, 2005, by including specific
affirmative language to that effect pursuant to Rule 307 of Regulation S-K,
which language was inadvertently omitted from the original filing on Form 10-K.
There were no other changes made to the Company's Form 10-K for the year ended
December 31, 2005.
ITEM 9A. DISCLOSURE CONTROLS AND PROCEDURES
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our Chief
Executive Officer and Chief Financial Officer have evaluated the
effectiveness of our disclosure controls and procedures (as
defined in Rule 13a-15(e) or Rule 15a-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the
end of the period covered by this annual report. Based on such
evaluation, such officers have concluded that our disclosure
controls and procedures as of the end of the period covered by
this annual report were effective to ensure that information
required to be disclosed by the Company in the reports that the
Company files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods
specified in the SEC rules and forms, and to ensure that such
information is accumulated and communicated to the Company's
management, including the Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING. To remediate the
material weaknesses in internal controls identified during the
Company's evaluation pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002 as of the year ended
December 31, 2004, during 2005, we have:
(i) hired a director of taxation, a newly created position;
(ii) increased the use of third-party tax service providers for
the more complex areas of our tax accounting and increased
formality and rigor of controls and procedures over
accounting for income taxes;
(iii) strengthened our due diligence procedures in reviewing
acquisition candidates to ensure that interaction of
accounting principles that might require prospective changes
are identified on a timely basis;
(iv) strengthened our analytical procedures with regard to the
preparation and review of all consolidation eliminations;
and
(v) completed the conversion of all subsidiaries to a unified
accounting system.
Management believes that the material weaknesses identified in the
prior year have been remediated. Refer to MANAGEMENT'S REPORT ON THE
EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING on page 50.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)3. Exhibits
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2.1 Securities Purchase Agreement, dated as of August 15, 2006, by and
among the Company, ARCap Investors, the Selling Members, ARCap REIT,
AISR, CM Corp and CM ARCap Investors (incorporated by reference to our
Current Report on Form 8-K, filed with the Commission on August 21,
2006).
3.1(a) Certificate of Business Trust dated as of August 12, 1996
(incorporated by reference to our Registration Statement on Form 10,
filed with the Commission on August 1, 1997).
3.1(b) Certificate of Amendment of the Restated Certificate of Business
Trust (incorporated by reference to our Registration Statement on Form
S-8, filed with the Commission on November 24, 2003).
3.1(c) Second Amended and Restated Trust Agreement dated as of November 17,
2003 (previously filed as part of our filing on Form 10-K on March 15,
2006)
3.1(d) Amendment No. 1 to Second Amended and Restated Trust Agreement dated
as of September 20, 2005 (incorporated by referenced to our Current
Report on Form 8-K, filed with the Commission on September 22, 2005).
3.1(e) Amendment No. 2 to Second Amended and Restated Trust Agreement dated
as of November 30, 2005 (incorporated by referenced to our
Registration Statement on Form 8-A filed with the Commission on
January 3, 2006).
3.1(f) Amendment No. 3 to Second Amended and Restated Trust Agreement
(incorporated by reference to Exhibit 3.1(a) in our June 30, 2006
Quarterly Report on Form 10-Q).
3.2(a) Fourth Amended and Restated Bylaws (incorporated by referenced to
our Current Report on Form 8-K, filed with the Commission on September
22, 2005).
3.2(b) Amendment No. 1 to Fourth Amended and Restated Bylaws (previously
filed as part of our filing on Form 10-K on March 15, 2006)
4.1 Specimen Copy of Share Certificate for shares of our beneficial
interest (incorporated by reference to our Registration Statement on
Form S-8, filed with the Commission on November 24, 2003).
4.2 Certificate of Designation of Special Preferred Voting Shares, dated
November 17, 2003 (incorporated by reference to our Current Report on
Form 8-K, filed with the Commission on December 1, 2003).
10(a) Management Agreement dated as of November 17, 2003, between us and
Related Capital Company LLC (incorporated by reference to Exhibit
10(a) in our December 31, 2003 Annual Report on Form 10-K).
10(b) Insurance Agreement among MBIA, CharterMac, Origination Trust, Owner
Trust, CharterMac Floater Certificate Trust ("Floater Certificate
Trust"), First Tennessee Bank National Association ("First
Tennessee"), Related Charter LP, and Bayerische Landesbank
Girozentrale, New York Branch ("Bayerische") dated as of May 21, 1998
(incorporated by reference to Exhibit 10 (aaay) in our June 30, 1998
Quarterly Report on Form 10-Q).
10(c) Liquidity Agreement among Owner Trust, Floater Certificate Trust,
First Tennessee, MBIA and Bayerische dated as of May 21, 1998
(incorporated by reference to Exhibit 10 (aaaz) in our June 30, 1998
Quarterly Report on Form 10-Q).
10(d) Liquidity Pledge and Security Agreement among Origination Trust,
Owner Trust, Floater Certificate Trust, MBIA, First Tennessee and
Bayerische dated as of May 21, 1998 (incorporated by reference to
Exhibit 10 (aaaaa) in our June 30, 1998 Quarterly Report on Form
10-Q).
10(e) Fee Agreement among Wilmington Trust Company, Floater Certificate
Trust and CharterMac dated as of May 21, 1998 (incorporated by
reference to Exhibit 10 (aaaab) in our June 30, 1998 Quarterly Report
on Form 10-Q).
10(f) Certificate Placement Agreement (incorporated by reference to Exhibit
10 (aaaac) in our June 30, 1998 Quarterly Report on Form 10-Q).
10(g) Remarketing Agreement (incorporated by reference to Exhibit 10
(aaaad) in our June 30, 1998 Quarterly Report on Form 10-Q).
10(h) Contribution Agreement dated as of December 17, 2002 (incorporated by
reference to our Preliminary Proxy Statement on Schedule 14A filed on
February 2, 2003).
10(i) Amended and Restated Operating Agreement of CharterMac Capital
Company LLC, dated as of November 17, 2003 (incorporated by reference
to our Current Report on Form 8-K, filed with the Commission on
December 1, 2003).
10(j) Special Preferred Voting Shares Purchase Agreement, dated as of
November 17, 2003, by and among the Company and APH Associates L.P.,
DLK Associates L.P., Marc Associates, L.P., Related General II, L.P.
and SJB Associates L.P. (incorporated by reference to our Current
Report on Form 8-K, filed with the Commission on December 1, 2003).
10(k) Standstill Agreement, dated as of November 17, 2003, by and among the
Company and APH Associates L.P., DLK Associates L.P., Marc Associates,
L.P., Related General II, L.P. and SJB Associates L.P. (incorporated
by reference to our Current Report on Form 8-K, filed with the
Commission on December 1, 2003).
10(l) Voting Agreement, dated as of November 17, 2003, by and among the
Company and APH Associates L.P., DLK Associates L.P., Marc Associates,
L.P., Related General II, L.P. and SJB Associates L.P. (incorporated
by reference to our Current Report on Form 8-K, filed with the
Commission on December 1, 2003).
10(m) Exchange Rights Agreement, dated as of November 17, 2003, by and
among CharterMac Capital Company, LLC, CharterMac Corporation, APH
Associates L.P., DLK Associates L.P, Marc Associates, L.P., Related
General II, L.P. and SJB Associates L.P. (incorporated by reference to
our Current Report on Form 8-K, filed with the Commission on December
1, 2003).
10(n) Lock-up Agreement of Denise L. Kiley, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(o) Lock-up Agreement of Alan P. Hirmes, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(p) Lock-up Agreement of Marc D. Schnitzer, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(q) Lock-up Agreement of Stuart J. Boesky, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(r) Lock-Up Agreement of Stephen M. Ross, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(s) Employment Agreement of Alan P. Hirmes, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(t) Employment Agreement of Marc D. Schnitzer, dated November 17, 2003
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003)
10(u) Future Relations Agreement, dated as of November 17, 2003, by and
among Stephen Ross, Related General II L.P., RCMP Management Inc., the
Related Companies, L.P., and CharterMac Capital Company, LLC
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(v) Ross Non-Qualified Share Option Agreement (incorporated by reference
to our Registration Statement on Form S-8, filed on November 24,
2003).
10(w) Registration Rights Agreement, dated as of November 17, 2003, by and
among our Company and APH Associates L.P., DLK Associates L.P., Marc
Associates, L.P., Related General II, L.P. and SJB Associates L.P.
(incorporated by reference to our Registration Statement on Form S-8,
filed on November 24, 2003).
10(x) Shared Services Agreement, dated as of November 17, 2003, by and
among The Related Companies, L.P., Related Management Company, and
CharterMac Capital Company (incorporated by reference to our Current
Report on Form 8-K, filed with the Commission on December 1, 2003).
10(y) Other Services Agreement, dated November 17, 2003, by and between
Relcap Holding Company LLC and CharterMac Capital Company, LLC
(incorporated by reference to our Current Report on Form 8-K, filed
with the Commission on December 1, 2003).
10(z) CharterMac Guaranty, dated December 17, 2002 (incorporated by
reference to our Current Report on Form 8-K, filed with the Commission
on December 1, 2003).
10(aa) Restricted Share Plan (incorporated by reference to our Registration
Statement on Form S-8, filed with the Commission on November 24,
2003).
10(ab) Amended and Restated Incentive Share Plan (incorporated by reference
to our Form S-8/A, filed with the Commission on March 2, 2004).
10(ac) Form of Non-Qualified Share Option Award Agreement. (incorporated by
reference to Exhibit 10(af) in our December 31, 2004 Annual Report on
Form 10-K).
10(ad) Form of Restricted Share Award Agreement. (incorporated by reference
to Exhibit 10(ag) in our December 31, 2004 Annual Report on Form
10-K).
10(ae) Separation and consulting agreement with Stuart J. Boesky
(incorporated by reference to our current report on Form 8-K, filed
with the Commission on November 9, 2005).
10(af) Amended And Restated Credit Agreement Dated As Of July 16, 2004 by
and among CharterMac, Charter Mac Corporation, and Fleet National
Bank, As Agent and Lenders, as amended (previously filed as part of
our filing on Form 10-K on March 15, 2006).
10(ag) Amended and Restated Mortgage Warehousing Credit and Security
Agreement, dated as of March 18, 2005, by and between CharterMac
Mortgage Capital Corporation, Fleet National Bank, a Bank of America
Company, as Agent and Lenders, as amended (previously filed as part of
our filing on Form 10-K on March 15, 2006).
10(ah) Acquisition Loan Agreement, dated as of December 24, 2001, among
Charter Mac Corporation, as Borrower, Fleet National Bank, as Agent,
and the Lenders, as amended (previously filed as part of our filing on
Form 10-K on March 15, 2006).
10(ai) Ninth Amended and Restated Loan Agreement $90,000,000 Tax Credit
Warehouse Capital Line of Credit to RCC Credit Facility, L.L.C. as
amended (previously filed as part of our filing on Form 10-K on March
15, 2006).
10(aj) Investment Agreement and Acquisition of Capri Capital Limited
Partnership by CM Investor LLC dated March 11, 2005 (previously filed
as part of our filing on Form 10-K on March 15, 2006).
10(ak) Second Amended and Restated Advisory Services Agreement between
American Mortgage Acceptance Company and CharterMac AMI Associates,
Inc. (previously filed as part of our filing on Form 10-K on March 15,
2006).
10(al) First Amendment to the Loan Agreement between CharterMac and
American Mortgage Acceptance Company (incorporated by reference to
Exhibit 10.1 in our Current Report on Form 8-K, filed with the
Commission on April 26, 2006).
10(am) Second Amendment to the Loan Agreement between CharterMac and
American Mortgage Acceptance Company (incorporated by reference to
Exhibit 10.2 in our Current Report on Form 8-K, filed with the
Commission on April 26, 2006).
10(an) Amended and Restated Credit Note between CharterMac and American
Mortgage Acceptance Company (incorporated by reference to Exhibit 10.3
in our Current Report on Form 8-K, filed with the Commission on April
26, 2006).
10(ao) Fifth Amendment to the Credit Agreement by and among Charter Mac
Corporation, as borrower, and CharterMac and CM Holding Trust, as
guarantors, with Bank of America, N.A. (incorporated by reference to
Exhibit 10.1 in our Current Report on Form 8-K, filed with the
Commission on May 4, 2006).
10(ap) Limited Liability Company Agreement dated June 28, 2006 of
Centerbrook Holdings LLC and IXIS Financial Products Inc. and Charter
Mac Corporation (incorporated by reference to Exhibit 10.1 in our June
30, 2006 Quarterly Report on Form 10-Q).
10(aq) Unitholder and Warrant Agreement among Centerbrook Holdings LLC,
IXIS Financial Products Inc. and Charter Mac Corporation, dated as of
June 28, 2006 (incorporated by reference to Exhibit 10.2 in our June
30, 2006 Quarterly Report on Form 10-Q).
10(ar) Limited Liability Company Agreement of Centerbrook Financial LLC,
dated as of June 28, 2006 (incorporated by reference to Exhibit 10.3
in our June 30, 2006 Quarterly Report on Form 10-Q).
10(as) Senior Loan Agreement among Centerbrook Financial LLC, the lenders
that are party thereto and Citibank, N.A., as senior agent, dated as
of June 28, 2006 (incorporated by reference to Exhibit 10.4 in our
June 30, 2006 Quarterly Report on Form 10-Q).
10(at) Mezzanine Loan Agreement among Centerbrook Financial LLC, the
lenders that are party thereto and Citibank, N.A., as senior agent,
dated as of June 28, 2006 (incorporated by reference to Exhibit 10.5
in our June 30, 2006 Quarterly Report on Form 10-Q).
10(au) Subordination and Security Agreement among Centerbrook Financial
LLC, Deutsche Bank Trust Company Americas, and Citibank, N.A., as
senior agent and mezzanine agent, dated as of June 28, 2006
(incorporated by reference to Exhibit 10.6 in our June 30, 2006
Quarterly Report on Form 10-Q).
10(av) Guarantee Agreement among CharterMac and IXIS Financial Products
Inc., dated as of June 28, 2006 (incorporated by reference to Exhibit
10.7 in our June 30, 2006 Quarterly Report on Form 10-Q).
10(aw) Right of First Refusal Letter Agreement among CharterMac and
Centerbrook Financial LLC, dated as of June 28, 2006 (incorporated by
reference to Exhibit 10.8 in our June 30, 2006 Quarterly Report on
Form 10-Q).
10(ay) Fee Letter among IXIS Capital Markets North America Inc. and
Centerbrook Holdings LLC, dated as of June 28, 2006 (incorporated by
reference to Exhibit 10.9 in our June 30, 2006 Quarterly Report on
Form 10-Q).
10(az) Credit Support Swap between Charter Mac Origination Trust 1 and
Centerbrook Financial LLC (incorporated by reference to Exhibit 10.10
in our June 30, 2006 Quarterly Report on Form 10-Q).
10(ba) Second Amended and Restated Limited Liability Company Agreement of
ARCap Investors, dated as of August 15, 2006, by and among CM ARCap
Investors, Leonard W. Cotton and James L. Duggins (incorporated by
reference to Exhibit 10.1 in our Current Report on Form 8-K, filed
with the Commission on August 21, 2006).
10(bb) Exchange Rights Agreement, dated as of August 15, 2006, by and among
the Company, ARCap Investors, CM ARCap Investors, Leonard W. Cotton
and James L. Duggins (incorporated by reference to Exhibit 10.2 in our
Current Report on Form 8-K, filed with the Commission on August 21,
2006).
10(bc) Registration Rights Agreement, dated as of August 15, 2006, by and
among the Company, CM ARCap Investors, Leonard W. Cotton and James L.
Duggins (incorporated by reference to Exhibit 10.3 in our Current
Report on Form 8-K, filed with the Commission on August 21, 2006).
10(bd) Employment Agreement, dated as of August 15, 2006, by and between
Leonard W. Cotton and ARCap REIT (incorporated by reference to Exhibit
10.4 in our Current Report on Form 8-K, filed with the Commission on
August 21, 2006).
10(be) Employment Agreement, dated as of August 15, 2006, by and between
James L. Duggins and ARCap REIT (incorporated by reference to Exhibit
10.5 in our Current Report on Form 8-K, filed with the Commission on
August 21, 2006).
10(bf) Revolving Credit and Term Loan Agreement, dated as of August 15,
2006, by and among the Company, CM Corp., the Guarantors listed on
Schedule 1 thereto, the Lenders named therein, Bank of America, N.A.
and UBS Securities LLC, as agents, Bank of America, N.A., as issuing
bank and swingline lender and as administrative agent, and Banc of
America Securities, LLC and UBS Securities LLC, as joint lead
arrangers and joint book managers (incorporated by reference to
Exhibit 10.6 in our Current Report on Form 8-K, filed with the
Commission on August 21, 2006).
10(bg) Restructuring Agreement dated August 31, 2006, among Capri Realty
Holdings, LLC, Quintin Primo, Brian Fargo and Daryl Carter et al. and
CM Investor LLC (incorporated by reference to Exhibit 10.1 in our
Current Report on Form 8-K, filed with the Commission on September 6,
2006).
12 Ratio of earnings to fixed charges and preferred dividends (previously
filed as part of our filing on Form 10-K on March 15, 2006).
21 Subsidiaries of our Company (previously filed as part of our filing on
Form 10-K on March 15, 2006).
23 Consent of Independent Registered Public Accounting Firm (previously
filed as part of our filing on Form 10-K on March 15, 2006).
31.1 Chief Executive Officer certification pursuant to Section 302 of the
Sarbanes- Oxley Act of 2002.*
31.2 Chief Financial Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.*
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, we have duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHARTERMAC
(COMPANY)
Date: October 16, 2006 By: /s/ Marc D Schnitzer
--------------------
Marc D. Schnitzer
Managing Trustee, Chief Executive Officer
and President
Date: October 16, 2006 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes
Managing Trustee, Chief Operating Officer
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated:
Signature Title Date
--------------------- --------------------------- ------------------
* Managing Trustee,
Stephen M. Ross Chairman of the Board October 16, 2006
/s/ Marc D. Schnitzer Managing Trustee,
---------------------
Marc D. Schnitzer Chief Executive Officer and
President October 16, 2006
/s/ Alan P. Hirmes Managing Trustee,
------------------
Alan P. Hirmes Chief Operating Officer and
Chief Financial Officer October 16, 2006
*
Peter T. Allen Managing Trustee October 16, 2006
*
Andrew L. Farkas Managing Trustee October 16, 2006
*
Thomas W. White Managing Trustee October 16, 2006
*
Jeff T. Blau Managing Trustee October 16, 2006
*
Robert A. Meister Managing Trustee October 16, 2006
*
Jerome Y. Halperin Managing Trustee October 16, 2006
*
Janice Cook Roberts Managing Trustee October 16, 2006
*
Nathan Gantcher Managing Trustee October 16, 2006
*
Robert L. Loverd Managing Trustee October 16, 2006
* by /s/ Alan P. Hirmes
------------------
Attorney-in-fact